If you have a business, you know that you have quite a bit of risk. Maybe more than quite a bit. Yeah, probably more. Anyways, the problem with business insurance is that it can be hard to make heads or tails of it sometimes – it can be like a foreign language. To help you get more confident speaking “business insurance,” we have ten “phrases” that you should know. Okay, they’re more like facts, but we wanted to keep the analogy going.
1. A BOP is a convenient way to insure small businesses.
A BOP, or business owner’s policy, can help small business owners get the coverage they need. It basically smooshes general liability, property insurance, and business interruption insurance into a convenient, neatly-wrapped package. Different coverages can be added to a BOP to increase your business’s protection. However, there are a few qualifications your business has to meet before it’s BOP-worthy.
2. Your business might be required to have workers’ compensation.
Certain businesses are required by law to carry workers’ compensation insurance – in fact, most are. Workers’ comp protects your employees if they get hurt on the job. It provides for medical payments and even reimburses the employee for a portion of their lost wages if they’re unable to work. Make sure that you have the workers’ comp coverage you need to be compliant with your state’s laws – and keep in mind that each state has different workers’ comp requirements. Workers’ comp is really important because your employees aren’t covered under general liability.
3. Flooding is not covered.
Your business has to purchase flood insurance as a separate policy because flooding is not covered under property insurance. If you’re worried that your business could someday end up underwater, you’ll have to go through an agent to get commercial flood insurance from the National Flood Insurance Program, or NFIP.
4. Property insurance protects your premises and business essentials.
Property insurance protects your building and business necessities (inventory, machinery, computers, etc.) against common perils, like fire. It helps you rebuild and repair your premises so that you can get your business started up again. Keep in mind that there are certain coverages that you’ll have to add to your property insurance – a basic property insurance policy only covers fire and lightning. You’d have to purchase a more extensive policy to get coverage against other perils like windstorms, hail damage, and earthquakes.
5. Choosing a higher deductible can help you save on your business insurance premium.
Your deductible is the amount that you agree to pay before the insurance company steps in to start covering expenses from a loss. If you select a higher deductible, your premiums may go down. It’s a bit of a balancing act – you want to make sure that your deductible isn’t so high that it would be hard to pay, but high enough that your premiums go down.
6. Having claims can make your premiums go up.
If you have a claim, the insurance company might see you as more of a risk. And that’s not good because the more of a risk you are, the higher your premiums could be. That’s why it’s so important for your business to commit to quality, safety, security, and workplace policies.
7. General liability insurance is your “slip-and-fall” insurance.
General liability protects your business against claims (true or untrue) that it caused someone bodily harm, property damage, or advertising injury. Basically, that means any claims that you broke their stuff, you broke them, or you slandered them in some way. General liability is crucial because people are clumsy. Accidents happen. You don’t want anyone to hold it against you.
8. If you have a really big claim, umbrella insurance can save the day.
Umbrella insurance protects your business from the whopper claims. It’s basically extra liability insurance that kicks in when the limit on the other, underlying policy runs out. Okay, you may still be scratching your head, and that’s okay because we have an example.
Let’s create a business. We’re going to say that they have $1 million of general liability. Now, let’s give them $1 million of umbrella insurance. Okay, here’s the fun part – let’s give them a $1.8 million claim. The general liability would kick in first and cover its $1 million before tapping out. But…that leaves $800,000 for our hypothetical business to pay. But don’t worry – their hypothetical umbrella insurance would swoop in and take care of the remaining $800,000. The day is saved!
9. Every business is different and needs different coverages.
The types of business insurance and limits that you need depend on several different factors – for example, your business’s size, the type of work that you do, and the business’s location. When getting insurance, it’s important that you work with an agent that will help you identify your risks and build an insurance plan that’s tailored to your business. We can help you do that here at Atlanta Insurance.
10. Risk management can help you reduce your business’s chance of financial loss.
Risk management is basically the process of scrutinizing your business for risks and taking steps to, well, manage them. It means implementing strategies to reduce or eliminate risks before they have the opportunity to hurt you. Risk management considers the losses that you’re vulnerable to and the likelihood that those losses will occur. Strategies for risk management include increasing safety and buying insurance.
These ten facts are only the tip of the glacier when it comes to business insurance, but it’s not so scary, right? There’s a lot to learn about commercial insurance, and that’s why it’s important to find out new stuff. Knowledge is power – someone smart said that once. It’s also important to find an insurance partner that you can trust, and that’s where we come in. We would love the opportunity to earn your business and become that trusted advisor, and we’ll start by getting you free quotes on your business insurance. To get started with your quotes, all you have to do is fill out our online quote form or give us a call today.