you have company-owned vehicles, you need a commercial automobile
policy. A commercial auto policy provides the same kind of coverages as
a personal auto policy, protecting the business against liability for
injury or property damaged caused by vehicles you own or have
responsibility for and for any physical damage they may cause.
policy, commercial auto policies also include uninsured and
underinsurance motorists coverage and medical payments coverage. You
will probably also want to purchase physical damage coverage to protect
your vehicles from damage or theft.
If you own
significant number of vehicles, you may qualify for reduced
“fleet” rates. Sometimes small businesses rely on
personal auto insurance policies to cover the business use of their
cars. While this can be an option, it’s something you need to
arrange through your insurance company, since many personal policies
exclude business use.Business owners should also be aware that they
might become liable when employees use their own cars for business
purposes. You can cover this under your commercial auto policy. If you
don’t have a commercial auto policy, you should be able to
this important coverage to your general liability or business owners
policy (BOP) with a non-owned and hired-auto endorsement.
become liable to third parties for injury or property damage in a
variety of ways. Commercial liability coverage is often included in a
package policy along with property insurance, such as a Business Owners
Policy or BOP. It may also be issued as a stand-alone policy called a
Commercial General Liability (CGL) policy. Commercial general liability
coverage addresses these principal sources of claims:
commercial liability policies offer a number of additional features,
- Products and completed operations
- Personal injury (such as libel, slander, false
arrest, invasion of privacy) and advertising liability (such as
advertising that libels, slanders, etc. and violations of privacy,
misappropriation of ideas, copyright infringement, etc.)
- Fire damage liability (for damage to leased or
- Automatic additional insured, which provides
automatic coverage when required by a contract, agreement or permit.
- Medical payments, paid to injured third parties
goodwill, not fault, is the determining factor, usually with a low
sub-limit such as $5000.
- Employment practices liability, for claims,
legal defense costs, brought by employees or job applicants, usually
with a low sub-limit.The cost basis of general liability insurance,
whether payroll, sales, square footage, or other measure, depends on
the type of business involved. Policies can be claims-made (which
provide coverage only while the policy is in effect, unless modified)
or occurrence (where the policy in effect, when the accident occurred,
is intended to provide coverage).
property policies cover loss or loss of use of any type of property,
particularly buildings, equipment, and contents. Commercial property
policies typically include coverage for business income or loss of use.
You can cover special types of property, such as valuable papers,
computers and electronic media, money and securities, agricultural
equipment, livestock, works of art and more, under the same commercial
property policy that covers your building and contents, or in separate
policies, depending on the situation.
most costly peril to insure, though windstorm damage rates can be in
high in certain geographical areas. Policies may cover named perils
only (including fire and windstorm and theft) or “all
risks.” “All risk” policies cover all
those specifically excluded, such as earthquake and flood. You can
cover these perils separately, or, for large commercial risks and
property schedules, in a Difference in Conditions (DIC) policy.If you
have a large portfolio of properties, coverage may be written on a
blanket basis, providing a single limit for all properties. This has
the advantage of minimizing any coinsurance problems, as well as
simplifying administration and sometimes lowering costs, depending on
the probable maximum loss you and the insurer agree upon for the
business owner package policy—or BOP—provides many,
not all, of the insurance coverages needed by many small or
medium-sized businesses. Sometimes referred to as a homeowners policy
for a business, BOPs vary by insurer, but standard features of the BOP
or “package” policies include:
- property coverage for buildings, equipment and
- liability for third-party claims brought
against the business which occur on the premises or from products or
- crime insurance for loss of money from
robberies and destruction; and coverage to protect from employee
dishonesty, such as embezzlement and theft
- vehicle coverage for rented or borrowed vehicles
- business income protection, which provides
reimbursement for up to one year of lost income if due to damage from a
covered peril, as well as extra expense coverage to pay for necessities
required to expedite restoring the business.By combining all these
coverages from separate policies into one policy, you can save money
and might avoid coverage gaps. Other advantages of the BOP are its
flexibility; expanding to meet the needs of a growing, changing
business; and the simplicity of having one policy instead of several.
Notable coverages not included in BOPs are workers’
professional liability, equipment breakdown, and business auto
the greatest loss to a business damaged by fire or another insured
peril is the loss of income due to inability to continue operations.
Several forms of business income insurance exist to protect against
these losses. For example, a BOP policy typically includes earnings
insurance, which compensates the business for the net loss resulting
from interrupted operations.
another type of coverage, extra expense, which provides funding for the
business to make the necessary arrangements to continue operations with
little or no interruption, including the costs of temporarily
relocating and related advertising expenses.
examples where a
business could use extra expense coverage include: renting another
location while the damaged premises are repaired, expediting delivery
of new merchandise via air freight to replace damaged contents, or
recreating documents essential to processing orders.
coverages can also cover lost income while a business regains its
market share or cover income lost due to the shutdown of a suppler or
even the loss of an anchor tenant in a shopping center. Additional
coverage are available for shutdown due to the disruption of a public
utility and by order of a civil authority. Call our office for an
analysis of your particular business income needs.
workers’ compensation laws require most employers to
employees for illnesses and injuries incurred on the job.
Workers’ compensation insurance provides injured workers or
families with compensation for lost wages and pays survivor benefits
and medical expenses, and funds rehabilitation programs.Unlike other
insurance policies, the main coverage section of a workers’
compensation policy, Part One, doesn’t have a dollar limit.
That’s because the insurance company writing your coverage
to pay whatever the workers’ compensation regulations of your
state stipulate your liability is, in regards to injuries to your
compensation policies, however, have a Part Two, called
employer’s liability that protects employers from lawsuits
employees may be entitled to bring against their employers under
special, though mostly rare, circumstances. This coverage is usually
limited to $1 million, but most umbrella policies can raise this
limit.If you operate in more than one state, your employees will be
subject to the workers’ compensation laws of the state they
in and you will need to purchase coverage accordingly. Even if you do
not have operations in other states, but your employees occasionally
travel outside your state, you will need an endorsement to your policy,
sometimes called an “all states endorsement,” to
those situations where an employee is injured and may claim benefits
under the jurisdiction of a different state.
& Officers Liability Insurance
of it as professional liability insurance for directors and officers of
a corporation. Like anyone, directors and officers can make mistakes of
judgment, but when they make mistakes based on negligence,
recklessness, or bad faith, they may be held liable for their acts or
officers policies typically have two parts. Part A provides direct
reimbursement for third-party claims brought against directors and
officers. Part B reimburses the corporation if it is required to
indemnify directors or officers according to state law, its corporate
charter, or by-laws. These policies are claims-made, meaning they only
provide coverage while they are in effect, unless otherwise modified,
as when they include a retroactive date for claims occurring before the
flood insurance, earthquake coverage can be expensive if you need it.
Commercial insurers tend to price it more dearly just after an
earthquake. In California, which is thought to have the highest
probable risk of earthquake loss, the state-run California Earthquake
Authority can provide insurance to homeowners, but does not underwrite
earthquake insurance for businesses. Earthquake policies have high
deductibles. Difference in Conditions policies can be written to
include earthquake coverage.
the risk of flood is so great in the areas where flood insurance is
actually needed, insurers are reluctant to provide it. Most flood
insurance in the U.S. is provided by the National Flood Insurance
Program, and the insurance companies that provide it do so through this
program. For large risks, a DIC may be negotiated to cover flood.
you have employees who handle money or securities or are in a position
to compromise the value of your assets through a dishonest act, you
need this insurance. Most package policies exclude or include only
nominal coverage for employee dishonesty, so you may want to buy a
separate fidelity or crime policy.
Practices Liability Insurance
issued as a separate policy, but also found as an endorsement to a
liability or D&O policy, this liability insurance protects
employers against charges of discrimination, wrongful discharge, sexual
harassment, hostile work environment, and similar work-related acts.
covers the employer, its employees acting in an official capacity, and
its directors and officers.
breakdown insurance can cover an extensive list of equipment, including
piping, turbines, engines, pumps, compressors, electrical panels,
generators, and more. This insurance covers failure of many kinds of
equipment, including boilers, machinery and electrical equipment.
breakdown insurance, you buy more than coverage—you buy the
insurer’s loss prevention expertise. Your insurer’s
technicians will inspect your boilers or other equipment to help you
prevent accidents from occurring in the first place. The insurance will
cover the relevant equipment as well as damage to your other property
and damage or injury to third parties. Policies also include extra
expense coverage to expedite repairs, minimizing down time. You can
also buy spoilage coverage to protect you from loss due to
refrigeration system breakdown.
liability policies include liquor liability coverage when the insured
is not in the business of selling or providing alcoholic beverages and
cover host or incidental liability, such as office parties or events
the firm may sponsor. A bar, tavern, restaurant, store or other entity
engaged in trade relating to alcoholic beverages needs to specially
include coverage in its general liability program.
Liability & malpractice
known as errors and omissions insurance, this insurance is available
for a variety of occupations. It covers negligence or wrongdoing of the
professional, including failure to exercise the care, knowledge, or
skill appropriate for the circumstances. Most professional liability
policies are claims-made, meaning the policy must…
in force to
afford coverage (as opposed to occurrence policies that trigger
depending on when the service was rendered), though amendments may be
purchased to extend dates when claims can be brought. Some of the
professional liability formats available include:
or Law Enforcement
bonds are, like surety bonds, contracts between three parties (in this
instance: the insurer, the employee, and the employer) and they provide
protection against employee dishonesty (we describe that coverage
A surety bond is a promise by the insurer (or indemnitor) to pay an
indemnitee should the principal (or insured) default on the obligation.
Some of the bonds we provide are:
- Contract payment and performance bonds
- License and permit bonds
- ERISA bonds
- Fidelity or dishonesty bonds on employees
- Court bonds, including fiduciary and judicial
- Public official bonds, including notary,
clerks, and judges
- Tax bonds
today can mean big money—more than the limits found in a
insurance policy. Most package policies or even primary liability
policies provide liability limits of $1 or $2 million or less.
That’s why businesses also need umbrella insurance, which is
called excess liability. These policies provide additional limits,
layering $1-5 million or more on top of your primary liability, or
“underlying” policies, such as package, commercial
automobile liability, workers compensation, and most other primary
also provide coverage for gaps in liability protection not necessarily
covered in primary liability policies.
coverages provided by umbrella policies may include advertising
liability such as wrongful use of a trademark name, liability from
watercraft used for business, and injuries to employees in tort not
covered by workers’ compensation. A self-insured retention or
SIR, which is like a deductible but applicable to defense costs as well
as damages, applies to claims from these kinds of additional coverages.
relatively inexpensive compared to the underlying policies they
supplement and they provide excellent “sleep”
Remember that an umbrella policy can never be a substitute for
underlying liability policies and in fact will not be valid in the
absence of the underlying policies.