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:: HOME :: CREDIT CARDS :: LONG DISTANCE :: INTERNET SERVICE :: LOANS :: CELL PHONES :: INSURANCE · Main Page · Auto Insurance  Compare Quotes Search by State Tips and Advice· Health Insurance Compare Quotes Tips and Advice· Life Insurance Compare Quotes Tips and Advice Life Ins. Calculator· Home Insurance Compare Quotes Tips and Advice· Business Insurance Compare Quotes Tips and Advice· Other Insurance · Info & Resources :: ONLINE BANKING :: KNOWLEDGE :: MORE |
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Business Insurance Tips and Advice Center Topic: Business Insurance Explained What is business insurance? See the subtopics menu for a detailed explanation of business insurance. For additional information about small business insurance, see the topic list directly below.
 Business Insurance BasicsWhat is business insurance? Much like personal insurance, business insurance is designed to offer protection against certain losses. The basics of business insurance are simple: businesses pay premiums to an insurance company and in the event of a loss of something covered by the policy, the insurance company will repay the business for that loss. Businesses are at risk in several ways. For example, if a natural disaster prevents a business from operating, income can be lost. Or if the building a business owns and the office materials inside are damaged by fire, a business will probably need money to rebuild and restock. Or if a vehicle owned by the business is involved in an accident, insurance can help pay both for the damages and any costs to injured third parties. Businesses are also at risk of being sued by injured and/or disgruntled parties. Businesses can be sued for various things, such as a customer slipping and falling in a store. An employee who is hurt while working for a company can also opt to sue the business in some cases. Liability insurance, which covers businesses for lawsuits and injuries caused to third parties, usually includes payment of attorneys' fees and coverage of medical expenses of individuals injured by the business. Both of these are the kinds of costs that can escalate quickly, and insurance coverage is critical. Small- to medium-sized businesses may be able to purchase something called a Businessowners Policy. This type of policy combines coverage for several types of business insurance into one package. ^ Back to top Business Insurance Coverage OptionsWhat does business insurance cover? There are a few basic business insurance coverage options, and a few specialized options that only certain types of businesses, or businesses with certain types of assets, may need. . The basic types of coverage are:
There are several other insurance options to consider when insuring a business:
^ Back to top Insuring a Home-Based BusinessWhat kind of insurance is needed for a home-based business? Home-based businesses need protection, too, although usually on a different scale than other types of businesses. Homeowner's insurance is not designed to address the needs of a business, including equipment costs or coverage for things like lost income inventory. So it's often not adequate to cover potential losses caused by operating a business out of a home. That's where business insurance comes in. The business insurance essentials are the same for a home-based business as for larger businesses. But the type and amount of coverage is different, depending on the type of business. There are three basic options for insuring a home-based business. For some businesses, an incidental business endorsement added to an existing homeowners policy can be adequate. Other businesses may require an in-home business policy. And others may find that a Businessowners Policy (BOP), a package of property and liability insurance, is the best option. A business endorsement simply adds additional coverage to an existing homeowners policy. This is usually only sufficient coverage for very small businesses, with very limited income from the business. An in-home business insurance policy is a policy created specifically for a home-based business. This type of coverage typically is the same as larger commercial policies, but with lower premiums and lower limits of coverage. A Businessowners Policy is often a good choice for a home-based business, as well, as the package includes all the types of coverage necessary. As with an in-home business policy, BOPs for a home-based business will likely have lower premiums and coverage limits than for other, larger types of businesses. ^ Back to top Insurance for Businesses with EmployeesWhat types of insurance do business employees need? Businesses with employees have a different level of risk, and additional responsibilities, than sole proprietors. The two key types of business insurance coverage options for businesses with employees are employment practices liability insurance and workers' compensation insurance. Employment practices liability provides coverage for businesses accused of violating the civil or legal rights of an employee. This insurance pays for any judgment and legal defense costs, no matter the outcome. Workers' compensation insurance is necessary for businesses with a minimum of employees, from three to five, depending on the state the business operates in. This insurance pays for medical expenses and a portion of lost wages for any employee injured on the job. Some businesses also purchase life insurance for key employees. Small businesses typically consider this type of coverage for employees or owners who are responsible for bringing in a large portion of clients or income, and without whom the business would have a difficult time operating. Although not considered business insurance in the same vein as the other policies discussed here, health insurance is also something businesses are expected to make available for their employees. Purchasing this type of insurance typically requires a health insurance specialist and will depend on the size of the business, how many employees it has, and where the business is located. ^ Back to top Business Insurance CostsHow much does business insurance cost? Costs for each type of business insurance varies, depending on the size and nature of the business, and how much protection is needed. Any reputable insurance professional will be able to discuss the options available, as well as explain the costs involved and the essentials of business insurance. Insurance is a balancing act and it is possible to be over-insured. The first step is to determine the value of the business's assets — inventory, property, and equipment. If the business suffered a loss, what would it cost to replace some or all of these assets? Once there is a basic understanding of the business and its assets, the next step is to get several quotes from insurance companies and understand the services they're offering for the price. The deductible — the amount the business will pay out of pocket before the insurance policy pays for anything — is a critical part of the mix, as well. A higher deductible will mean lower premiums, but it's important to ensure that the deductible is reasonable for the business to pay. A package policy can offer some savings over buying individual coverage, so working with an insurance professional who understand the needs of the type of business is important. Another way to manage business insurance costs is to reduce the chance of a loss. Many insurance companies will offer discounts on premiums when a business takes action to reduce the chance of a loss, such as installing a fire alarm or having a disaster recover plan in place. Once a business is insured, the best way to keep costs down is to keep the number of claims down. Avoiding losses in the first place shows that the business is careful and that is often rewarded. ^ Back to top Finding a Business Insurance SpecialistHow do businesses find the right broker or agent to buy business insurance? The best way to find the right business insurance policy for a business is to work with a licensed insurance professional. Insurance is a complicated business and it's best to work closely with a professional who understands the insurance business. A good insurance professional (a broker or agent), is a partner in a business that understands the special needs of the business, and offers advice about how to prevent losses. An insurance broker is typically someone who represents the business, the policyholder, and is often the best bet for a large business or businesses with a high level of risk. An insurance agent acts on behalf of the insurer, and is often better for a smaller business, or one with limited or well-known risks. To find a good broker or agent, check with other local business people, business owners in a similar business, or friends and family for recommendations. Then talk to these people and ask lots of questions. It's important to feel comfortable with this insurance professional — when a business suffers a loss, this person is usually the first phone call and someone who will be integral to solving the issue. Research to make sure there are no outstanding complaints about the agent or broker, and make sure he or she has a valid license to operate in the state the business is located in. This information is available from the state and is usually easily accessible online. ^ Back to top
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