Recently Harmoning Agency presented at the Renville County EDA Lunch & Learn on business insurance. Let’s take a deeper dive into the types of insurance a business would need and how each works.
Business Insurance
What you don’t know can hurt you!
Types of Business Insurance
General Liability
This insurance provides coverage for a business for any bodily injury, personal injury or property damage caused by your business operations or products or for an injury that occurs on your property to a customer. Typically you buy $1,000,000 coverage with additional coverage add-ons. It is important to remember that you are not only purchasing the insurance but also the coverage for investigation and defense cases. General liability cost is based on sales, payroll and square footage of the business building.
Property Coverage
Buildings that you own or rent are covered by property insurance coverage. You may or may not be required to insure your landlord’s half of property insurance as stated in a renter’s agreement. We recommend to include property coverage on your business’ personal property such as furniture, computers, furnishings as well as others. This includes the betterments and improvements such as remodels of bathrooms that you did to the rental property. You are covered in the case of loss. Property coverage includes insurance for business income and extra expense. Think of a small fire when you need to be down for smoke and water damage. This would cover your loss of income and cover the expenses for cleaning crews.
Workers Compensation and Employer Liability Coverage
Employer is protected if an employee is hurt in the scope of employment under this coverage. This also covers the loss wages and medical expenses if injured. State law requires that business must carry if they have employees. Some exceptions to this requirement include farming, family members and Officers of an organization. Corporations are where this coverage looses these exceptions. Think of a family farm that is an LLC. You may be family members outside of the LLC but your are not family members of the corporation and will need this coverage.
Auto Insurance Coverage
Auto coverage provides protection for the business while operating vehicles for the business. This insurance can also protect the value of the vehicle (comprehensive and collision). If the business does not own a vehicle, then a minimum should be carried for hired or non-owned auto coverage. Think of an LLC, mom uses her personal vehicle to get the mail and buy supplies everyday. This would be an auto exposure to the business that will need protection.
Flood Insurance
10 years ago we didn’t talk much about flood insurance in the Renville County. Now it is becoming more common. As a result, flood insurance is easier to purchase than in the past, especially outside of the city limits and in rural areas. There are government flood programs or private flood insurance coverage options. Remember to protect not only the building but also the business personal property. Think about what would happen to the business goods if flooding would happen in your basement. Make sure those items are also covered.
Crime Insurance
This coverage is for the loss of money or assets resulting in acts such as employee theft and impersonation fraud. Crime insurance is becoming a more common claim. This is commonly a low addition to your business coverage and very important. Think about a mistake happening in the payroll system. Your coverage will help protect you and your business.
Employment Practices Liability
Employment practices liability provides coverage for the employer against “allegations” of wrongful termination, discrimination or harassment. Think about the “me too” movement for instance. Remember you do not have to commit the wrongdoing to be accused and need coverage.
Director and Officers Liability
This coverage is a must for any non-profit or for-profit company with a board of directors or shareholders. However, director and officers liability is becoming harder to obtain since the pandemic. No one should serve on a board without this protection.
Disability Short Term and Long Term
When considering disability insurance, consider how long your company could operate without you. Your coverage should be purchased for protection against that amount of time. Short term disability is usually for up to 90 days. Long term disability provides coverage for after 90 days up to a year or two. This is important and varies a lot by industry and what you are doing within your industry. If you work within an office versus if you are in the warehouse, your chances of getting injured are varied and so this will be impacted by your coverage.
Key Employee Life Insurance
This is very important coverage to have. What happens if you loose your only manager in your business? If you are a small business, this aids in keeping you going when tragedy strikes. This insurance covers the cost of recruiting, hiring and training a replacement employee. Proceeds can be used to offset the loss of business due to the employee’s death.
Cyber Liability Data Compromise
Cyber liability data compromise is the fastest growing of all claims. This is availability from most insurance companies – just ask! Computers with Windows 7 have lost all support in January 2020. Request first party coverage (for you) and third-party coverage (for others) in case you are wondering the “second party” is the insurance company. Remember in a data breach or compromise you are responsible to contact all people potentially affected. What will this cost you if you do not carry this business insurance?
Thank you to the Renville County EDA for providing us with a platform to speak with the local community about Insurance for Business. If you are looking for additional learning opportunities, check out the Renville County EDA’s past and upcoming Lunch & Learn webinars on a variety of business topics. For additional questions on business related insurance, contact us today and we will review your options.