Do you need Business Insurance?



Choosing business insurance doesn’t need to be difficult. If you are a business owner and need to insure certain aspects of your business, Journey Insurance offers a range of insurance coverage for a wide variety of businesses. Business insurance protects your investment by minimizing financial risks associated with unexpected events such as a death of a partner, an injured employee or a natural disaster. If your business is an LLC or a Corporation, your personal assets are protected from business liabilities, however neither business structure is a substitute for liability insurance, which covers your business from losses.


Types of Business Insurance:


General Liability Insurance: Business owners purchase general liability insurance to cover legal hassles due to accident, injuries and claims of negligence. These policies protect against payments as the result of bodily injury, property damage, medical expenses, libel, slander, the cost of defending lawsuits, and settlement bonds or judgments required during an appeal procedure.


Product Liability Insurance: Companies that manufacture, wholesale, distribute, and retail a product may be liable for its safety. Product liability insurance protects against financial loss as a result of a defect product that causes injury or bodily harm. The amount of insurance you should purchase depends on the products you sell or manufacture. A clothing store would have far less risk than a small appliance store, for example.


Professional Liability Insurance: Business owners providing services should consider having professional liability insurance (also known as errors & omissions insurance). This type of liability coverage protects your business against malpractice, errors, and negligence in provision of services to your customers. Depending on your profession, you may be required by your state government to carry such a policy. For example, physicians are required to purchase malpractice insurance as a condition of practicing in certain states.


Commercial Property Insurance: Property insurance covers everything related to the loss and damage of company property due to a wide-variety of events such as fire, smoke, wind and hail storms, civil disobedience and vandalism. The definition of “property” is broad, and includes lost income, business interruption, buildings, computers, company papers and money.


Property insurance policies come in two basic forms: (1) all-risk policies covering a wide-range of incidents and perils except those noted in the policy; (2) peril-specific policies that cover losses from only those perils listed in the policy. Consult your insurance agent or broker about the type of business property insurance best suited for your small business.


Home Based Business Insurance: Contrary to popular belief, homeowners’ insurance policies do not generally cover home-based business losses. Depending on risks to your business, you may add riders to your homeowners’ policy to cover normal business risks such as property damage. However, homeowners’ policies only go so far in covering home-based businesses and you may need to purchase additional policies to cover other risks, such as general and professional liability.



Insurance Requirements for Employers


Businesses with employees are required by law to pay for certain types of insurance: Workers Compensation insurance, unemployment insurance and depending on where the business is located, disability insurance.


Worker’s Compensation Insurance: Business with employees are required to carry workers compensation insurance coverage.


Unemployment Insurance Tax: Businesses with employees are required to pay unemployment insurance taxes under certain conditions. If your business is required to pay these taxes, you must register your business with your state’s workforce agency.


Disability Insurance: Some states require employers to provide partial wage replacement insurance coverage to their eligible employees for non-work related sickness or injury. Currently, if your employees are located in any of the following states, you are required to purchase disability insurance:


    • California: Employment Development Department
    • Hawaii: Unemployment Insurance Division
    • New Jersey: Department of Labor and Workforce Development
    • New York: New York State Workers’ Compensation Board
    • Rhode Island: Rhode Island Department of Labor and Training


Five Tips for Buying Business Insurance

Use these steps to assess what types of insurance are best for your business, and how to secure coverage to provide adequate protection and minimize risks.

1. Asses your risks. Insurance companies determine the level of risk they’ll accept when issuing policies. This process is called underwriting. The insurance company reviews your application and determines whether it will provide all or portion of coverage being requested. Each underwritten policy carries a premium and a deductible. Premiums vary widely among insurance companies, and depend on a number of risk factors, including your business location, building type, local fire protection services, and the amount of insurance you purchase.


2. Shop Around. The extent and costs of coverage vary from company to company.


3. Consider a Business Owner’s Policy. Insurance can be purchased separately or in a package called a business owner’s policy (BOP). Purchasing separate policies from different insurers can result in higher total premiums. A BOP combines typical coverage options into a standard package, and is offered at a premium that is less than if each type of coverage was purchased separately. Typically, BOP’s consist of covering property, general liability, business interruption and other types of coverage common to most types of business. Not every type of insurance is included in a BOP. If your business has unique risks, you may require additional coverage.


4. Find a Reputable, Licensed Agent. Brokers can help you find policies that match your business needs. Brokers receive commissions from insurance companies when they sell policies, so it’s important you find a broker that is reputable and is interested in your needs as much as his own. Make sure your broker understands all the risks associated with your business. Finding a good insurance agent is as important as finding a good lawyer or accountant. You should always look for one that has a license. State governments regulate the insurance industry and license insurance brokers.


5. Assess Your Insurance Coverage on an annual basis. As your business grows, so do your liabilities. You don’t want to be caught underinsured should disaster strike. If you have purchased or replaced equipment or expanded operations, you should contact your insurance broker to discuss changes in your business and how they affect your coverage.


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