At Oakwood, we’re proud of our broad base of knowledge when it comes to understanding commercial risks. Over the years, we’ve developed an extensive expertise of certain risks and the skills needed to underwrite them. Because of this, our underwriters know and understand what coverages are necessary to protect these businesses. Learn more about the type of policies we cover.
Business owners face a challenge when identifying the business insurance they need. You want an insurance policy to comprehensively protect your company. However, you also want to avoid paying for coverage your business may not need. By identifying the coverage you need, you limit the financial burden on your business.
What are some insurance coverages to consider?
Coverage for Business Properties
We’d be remiss if we didn’t start off with our bread and butter. If your business owns a property, then you want coverage for the building and the items in the building.
Commercial property insurance depends on the type of property owned by the company. For example, a policy for an office building differs from the policy provided to a restaurant. The risks differ between these two property types. Ideally, you want coverage against most risks to a property itself. You also want to cover risks to the business that relate directly to the property.
Some policies offer coverage for lost income when a covered peril prevents a business from operating. The business interruption coverage depends on the policy you purchase.
Business insurance protects against major financial losses. Therefore, every company needs coverage for common risks. While the amount of coverage depends on the perceived risk to your business, you want to obtain liability protection, coverage for any properties the company owns and protection for employees.
Voluntary Property Damage provides coverage for damage to property in the care, custody, or control of the insured. The property damage must be caused by an occurrence and result from operations that are a part of the insured’s business and take place away from any premises the insured rents, owns, or occupies. Limits up to $25,000 per occurrence / $25,000 aggregate are available. A minimum $250 deductible applies.
Let’s look at how this coverage works:
The insured was hired to clean a customer’s carpet. In the process of doing so, the insured damaged the carpet. Normally, the claim wouldn’t be covered due to the Care, Custody, or Control exclusion. If Voluntary Property Damage is purchased, however, it would cover the loss after the deductible is applied.
Additional Commercial–But NOT Property–Coverage to Consider
Worker’s Compensation Insurance Coverage
Any business with an employee should obtain appropriate worker’s compensation coverage. Often, this is the law. The business insurance protects your employees from accidents, injuries or work-related illnesses. It allows your employees to seek assistance without facing high bills or expenses while they are unable to work.
Exact standards for workers’ comp coverage depend on the state. However, most businesses want the policy when they decide to hire an employee. You may qualify for some exceptions if the other individual is a partner in the company. But the standard usually applies to most businesses and situations.
Liability insurance is a necessity for every company. Even a company with a low perceived liability risk should buy a policy with liability protection.
The policy limits the cost to a business when a client or visitor to your company sues for injuries that occur on company property or as a result of using a company’s services. A business with a low risk may not need a large amount of protection. But, you should obtain some coverage for liability concerns.
There are also a few more specialized forms of Liability Protection.
Contracting Errors and Omissions (E&O) covers:
- The costs to redo faulty work, including the cost of labor and materials.
- Consequential or third-party losses caused by faulty work. This includes financial and production losses that can be directly attributed to the faulty work.
- Damage for the contractor’s faulty workmanship, materials, or products. This may include design.
This example illustrates how E&O coverage works.
The insured just completed a $75,000 electrical wiring renovation. Six months later, an electrical fire causes considerable damage. The cause is determined to be improper installation of the wiring. While the damage to the building is covered under the General Liability policy, the cost of labor and materials needed to redo the work isn’t. E&O coverage would respond not only to the costs associated with redoing the insured’s work but also to the costs of the corresponding materials. A deductible typically applies.
Product Liability Coverage
If your business manufactures products for sale on the general market, product liability insurance is a must. Even a business that takes every measure possible to make sure its products are safe can find itself named in a lawsuit due to damages caused by one of its products. Product liability insurance works to protect a business in such a case, with coverage available to be tailored specifically to a specific type of product.
Commercial Vehicle Insurance
This is sometimes referred to as Commercial Auto Insurance, which we actually have a partner agency to assist with. If company vehicles will be used, those vehicles should be fully insured to protect businesses against liability if an accident should occur. At the very least, businesses should insure against third-party injury, but comprehensive insurance will cover that vehicle in an accident, as well. If employees are using their own cars for business, their own personal insurance will cover them in the event of an accident. One major exception to this is if they are delivering goods or services for a fee. This includes delivery personnel.
So there you have it. Seven different types of Commercial or Business Insurance, starting with the ever-important Commercial Property. It’s the biggest investment most businesses ever make, similar to the residential home being the largest investment in a family. Make sure it is taken care of and talk to the experts. We’ll be here if you need us.