Factors To Consider When Getting A Business Insurance

Getting business insurance can protect you from the unwanted costs of running a business. Possible accidents, lawsuits, and natural phenomena may drastically affect the business if it is not under the appropriate insurance. 

Which coverages are required rather than optional?

Some coverages are required by law rather than chosen, and in California the requirement is a state one rather than federal. Workers’ compensation is mandated by Labor Code section 3700 from the first employee, with no small employer exemption. Unemployment insurance runs through a joint federal and state system, and State Disability Insurance is a California program funded by employee payroll withholding rather than a policy the business buys.

Requirements differ sharply between states, so nothing written for a national audience should be relied on here. Contracts and leases often add their own requirements on top of what the law demands, and those are usually the ones that decide what a business actually has to carry. 

Types of business insurance

1. General Liability Insurance
It responds to bodily injury and property damage caused by an occurrence, plus a set of personal and advertising injury offenses that commonly include libel, slander and wrongful eviction. It also funds the defense of a covered claim, which is often the part a business actually uses. Which offenses are listed, and whether defense costs sit inside or outside the limit, differs between forms.

Product liability insurance

Manufacturers, wholesalers, distributors and retailers can all be drawn into a product liability claim. California applies strict liability across the chain of distribution, so a claimant may not need to show anyone was careless, only that the product was defective and caused harm.

Professional liability insurance

Professional liability insurance accommodates customer-facing businesses, including financial losses 
produced by malpractice, errors, or neglect.

Commercial property insurance

Commercial property insurance is for businesses with plenty of real estate and other physical assets. This policy can protect your firm from property loss and damage caused by various disasters, including:

• Fire
• Smoke
• Wind
• Hail storms
• Riot or civil commotion
• Vandalism

Home-based business insurance

A homeowners policy excludes liability arising out of a business run from the residence and caps business property at a small sublimit. An endorsement can buy back a limited amount of that, and larger operations need a separate policy. We cover this in home-based business insurance. 

Business owner’s policy

A business owner’s policy incorporates all standard coverage options into a single package. Packaging property and liability together can simplify a program, though whether it fits depends on the size and nature of the operation.
Steps to Get or Buy a Business Insurance
There are four steps to buying insurance, and those are as follows: 

1. Make a risk assessment.
2. Find a licensed agent with a good reputation.
3. Look for available offers.
4. Re-evaluate every year.

What does the wrong policy cost a business?

Everything may simply go awry, and having a business is no exception. You will have to pay for claims out of your pocket by getting the wrong insurance that doesn’t fit the company. The struggles of not having insurance can cause a loss of funds which may also compel many small business owners to close their doors permanently. 

At Schneiderman Insurance Agency, we review coverage with clients and explain the tradeoffs in plain language. To learn more about how we can help you, please contact our agency at (818) 322-4744 or request a quote online.

Disclaimer

This article is provided by Schneiderman Insurance Agency for general informational purposes only. It is not legal, tax, financial, claims, or coverage advice. We are licensed insurance professionals, not attorneys, accountants, or financial advisors, and nothing here should be relied on as a substitute for advice from a qualified professional in those fields. This content is general in nature and is not a review of, or a recommendation for, any individual reader’s specific insurance needs, policies, or circumstances. Insurance coverage depends entirely on the specific terms, conditions, endorsements, exclusions, limits, underwriting eligibility, carrier, and facts of each situation, and the actual policy language always controls. We do not guarantee any coverage, pricing, eligibility, underwriting approval, or claim outcome. Reading this article does not create an agent-client relationship. To understand how these issues apply to your situation, please review your own policy and speak with a licensed insurance professional, and consult legal, tax, or financial advisors where appropriate.