Whether you’re a small startup, a growing business, or an established enterprise, understanding your business insurance coverage needs is vital.
While we will be giving a general overview of these policies, you will need to consult with a licensed insurance professional in your jurisdiction to evaluate your specific risk and how to best protect your business.
Whether it is written or case law, your exposure varies from one jurisdiction to another. For example, a jury probably would not put the same value on a personal injury case in Manhattan as they would in Greenbow, Alabama.
It is also important to understand two types of claims presented to any policy. These are a “first-party claim” and a “third-party claim.”
A first-party insurance claim is a claim you make directly against your own insurance for damages. A third-party insurance claim occurs when someone else makes a claim against you for damages for which they allege you are liable.
Here is a breakdown of the types of business insurance coverage available.
Types of Business Insurance Coverage
General Liability Insurance
General liability insurance is designed to protect your business from a variety of third-party claims.
This includes the risk of a lawsuit arising from everyday business activities. General liability coverage could include claims of property damage, personal injury, bodily injury, and advertising injury. This policy also could provide you with a defense for covered perils where you may not be liable.
Typically, you will be asked for this type of coverage when your business might impact other entities. An example of this would be leasing office space. The owner of the space wants to be sure you are properly covered with a liability policy and may ask to be named as an additional insured on your policy.
Employment Practices Liability Insurance (EPLI)
EPLI protects against third-party claims and provides coverage to employers against claims made by employees. For example, an employee can allege discrimination based on sex, race, age, disability, wrongful termination, harassment, or other factors.
It is important to remember in today’s environment that you could be accused of actions for which you would not be found liable. In these cases, the coverage would pay for the cost to defend the allegation, which can be tens of thousands of dollars.
Property Insurance
Property insurance is generally a first-party coverage and protects your physical assets – your building, equipment, inventory, and more – from damage due to fire, theft, or other disasters.
Perils covered by property insurance typically include select weather-related afflictions, including damage caused by fire, smoke, wind, hail, the impact of snow and ice, lightning, and more. Property insurance also protects against vandalism and theft, covering the structure and its contents.
Your level of coverage should be determined by your ability to continue business if you suffered a loss to your assets. If you do not have the means to immediately replace or repair these assets to continue normal business activities, you could be putting your business in jeopardy.
Cyber Insurance
Cyber insurance is considered both a first-party and third-party coverage. A policy assists the employer in paying any financial losses they may incur in the event of a cyberattack or data breach. It also helps them cover any costs related to the remediation process, such as paying for the investigation, crisis communication, legal services, and refunds to customers.
An employer’s actions could make them responsible for or sustain a business loss due to unintended or deliberate acts. Cybercrime coverage would afford a defense against these types of losses.
Workers’ Compensation Insurance
Workers’ compensation is a third-party claim by your employee. It is designed for the employee to have resolution to an injury claim without having to bring a lawsuit against the employer.
Every U.S. state except Texas mandates this coverage for businesses and can impose stiff penalties if you do not carry workers compensation for your employees. It covers medical expenses and lost wages if an employee has a work-related injury. In some cases, it will offer a settlement for a permanency.
Professional Liability Insurance
When your business is based on providing professional services, advice, or recommendations to your clients, professional liability insurance will protect you against possible accidents, misunderstandings, miscommunication, unintentional oversights, or poor documentation that leads the client to realize some type of loss.
Also known as errors and omissions insurance, it’s crucial for service-based businesses. It safeguards you against claims of negligence or mistakes in your work.
Commercial Auto Insurance
If your business uses automobiles which could be classified as owned, non-owned, or hired, commercial auto insurance coverage will assist in mitigating risks. Although the vehicle in question might have coverage that satisfies the state requirements, it may not be the right coverage that would protect your business.
Business Owners Policy (BOP)
A BOP will bundle some of the options above to make it more economical for small businesses. It will combine a general liability and property policy with some additional options like cyber, data breach, crime, contractors’ equipment, or hired and non-owned auto coverages. Each carrier tends to offer slightly different coverage but usually not as robust as a stand-alone policy.
Commercial Package
This is a tailored approach to your specific business to get the exact combination of business insurance with specific limits that you may need. These packages are a customized approach by your broker when you have unique needs.
Determining Your Insurance Needs and Working with an Insurance Professional
Now that we’ve covered the basics, how do you determine what your business really needs?
Work with a licensed insurance professional within your jurisdiction to formulate a risk assessment of your business, industry regulations, business size, and budget to find the right balance.
GTM Insurance Agency LLC is a locally based agency that has national coverage. We practice in all 50 states with a highly-qualified staff to assist in your insurance needs.
For specific information related to your business insurance needs, contact us for a confidential review.
Working with a licensed insurance professional will be your path to the proper coverages for your business.
Conclusion
Remember, insurance isn’t just a safety net; it’s a strategic move to protect your business’s future.
Business insurance through the GTM Insurance Agency combined with GTM Payroll’s HCM platform can create greater efficiencies for employers. For more information or to get a quote, call (518) 373-4111.
