Hauser Insurance Group Details Business Insurance Basics
Hauser Insurance, a comprehensive multi-location insurance company, highlights the basics of business insurance for small, medium, and large business owners.
Operating a small (or large) business is a constant balancing act. A product-focused company is always working to keep affordable products on the shelves. A service-based business wants to adequately meet its customers’ service needs. These requirements may change over time, and some customers are more easily satisfied than others.
Although both types of companies are focused on income generation, these business owners must also ensure that the business is running smoothly. Building maintenance, information technology systems, and human resources are among integral business operations. Many astute company owners also regard business insurance as a key operational component.
Why Business Insurance is Important
Unexpected property damage incidents could occur at any time. A car could crash through a retail store’s display window without warning. During a windstorm, a tree could fall on the building that houses an accounting firm. A customer could fall and injure themselves during their hair salon appointment.
If the business is not insured against these (or other) risks, the owner will likely have to pay the claim out of their pocket. Depending on the business’s financial resources, paying a costly property damage claim or legal settlement could potentially bankrupt the company.
Common Misconceptions About Business Structures
In choosing a business structure, a business owner may think a corporation or limited liability company (or LLC) will shield them from lawsuits. However, both business structures only provide limited protection for the owner’s personal property. Neither business structure protects the business from potentially costly (and damaging) lawsuits.
However, a well-coordinated business insurance package offers much-needed protection for the business’ diverse assets. Working with an experienced commercial insurance company, such as Hauser Insurance Group, enables the business owner to accomplish this goal.
Are Businesses Required to Purchase Insurance?
Most companies are not required to purchase business insurance for general business operations. However, certain scenarios dictate that business owners obtain one or more targeted insurance policies.
Federal and State Insurance Requirements
The United States federal government states that every business with employees must have workers’ compensation insurance, unemployment insurance, and disability insurance. Because states’ insurance requirements vary, the business owner should contact their state insurance department for guidance. All three types of insurance provide financial support to employees impacted by unforeseen job-related incidents.
Workers’ compensation insurance provides financial resources to an employee who cannot work due to a job-related illness or injury. This coverage will help to pay for the employee’s medical costs.
Unemployment insurance provides benefits to workers who have been separated from their jobs through no fault of their own. Employees could be affected by a departmental layoff due to an economic downturn.
Alternatively, a vehicle manufacturer’s employees could be laid off due to an unexpected drop in demand for a certain car or truck. In both situations, employees would likely be eligible for unemployment benefits.
Disability insurance can also provide an employee with regular income. To qualify, their disability must prevent them from earning an income.
Occupations Requiring Professional Liability Coverage
If an individual engages in certain occupations, experts recommend that they carry professional liability insurance. Whether or not specific mandates are in place, it would not be advisable to pursue these careers without coverage.
Accountants, attorneys, contractors, and physicians should always obtain professional liability insurance. Insurance agents, physical/occupational therapists, real estate agents, and stockbrokers should also have coverage. Finally, teachers and therapists/counselors should carry professional liability insurance.
Specific Insurance Coverage Scenarios
If a business owner conducts operations in a rented space, the landlord’s policy may not cover these activities. Therefore, the business owner should purchase their own insurance coverage(s) from a licensed commercial insurance agent, such as Hauser Insurance Group.
Certain professional services contracts may include a clause stating that the provider must provide proof of insurance. This will ensure compensation for damages if an unfortunate incident occurs during the contract term.
If the business owner takes out a loan, the loan agreement may specify that they obtain a certain type of insurance. The required policy may be related to their inherent industry risks.
Common Business Insurance Types
Business owners should first purchase legally required or highly recommended business insurance. Beyond that, other types of insurance will offer protection for common business risks. A knowledgeable insurance professional, such as a Hauser Insurance Group licensed agent, can recommend the best coverage package.
General Liability Insurance
A general liability policy offers protection from financial losses associated with varied occurrences. Examples include property damage, bodily injury, medical expenses, libel or slander, and lawsuit defense. A general liability policy is recommended for all businesses.
Professional Liability Insurance
A professional liability policy protects against financial losses resulting from errors, negligence, or malpractice. Also called “Errors and Omissions Insurance,” this coverage is recommended for service providers. Examples include attorneys, physicians, and accountants.
Product Liability Insurance
A product liability policy offers protection from financial losses resulting from defective product use that causes bodily harm or injury. This coverage is useful for companies that manufacture and/or distribute a product. This includes wholesale and retail businesses.
Business Property Insurance
A commercial property policy protects a business from damage or loss of company property resulting from an unexpected event. Examples include building fires, windstorms or hailstorms, vandalism, and civil disobedience. This coverage is recommended for businesses with substantial physical assets. Note: Separate coverage is needed for floods or earthquakes.
Business Liability Insurance
Also called commercial liability insurance, this coverage offers protection against liability claims. This coverage would apply to occurrences such as customer “trip and fall incidents” that took place on business property.
Business Income Insurance
A business income policy helps to replace the insured’s lost income if the business cannot function because of a covered loss. Examples include a building fire or damage from a falling tree. This coverage helps the business owner to pay bills, meet payroll, and handle other routine expenses. This coverage is also known as business interruption insurance.
Business Owner’s Policy
A business owner’s policy combines business property coverage along with business liability and business income insurance. Business owners who want an “all in one” policy will appreciate this streamlined option.
Commercial Auto Insurance
A commercial auto policy protects against property damage and/or bodily injury claims resulting from an accident caused by a company-owned vehicle. This coverage is ideal for businesses that provide courier services or auto dealership customer shuttle services.
Commercial Umbrella Insurance
A commercial umbrella policy acts as an “umbrella” in conjunction with other liability policies. If a claim exceeds the amounts of an existing liability policy, the umbrella policy can help to pay the claim amount’s difference.
Data Breach Insurance
A data breach insurance policy (or cyber insurance policy) can help cover costs related to the theft (or loss) of customers’ personal information. The policy can pay the costs of notifying customers, offering an identity theft monitoring service, and implementing a targeted public relations campaign. Hauser Insurance Group is a recognized cyber insurance coverage expert.
3 Factors That Influence Business Insurance Rates
Variations in businesses’ types, sizes, and operational parameters mean there’s no “one size fits all” approach to insurance rates. Consider these three factors that affect each company’s insurance premiums.
Business Geographic Location
A business’ geographic location helps to determine its property damage risks. To illustrate, a company located in an area prone to hurricanes, wildfires, or tornadoes will have a higher risk of property damage than a similar business located elsewhere. The higher-risk company will incur a higher commercial property insurance premium.
Business Type and Risk
Each company’s business type plays a key role in its business insurance rates. A business with a higher-than-normal risk exposure can expect to pay higher insurance premiums. This “higher risk, higher rates” principle applies to numerous types of policies.
To illustrate, construction companies have drastically higher general liability insurance rates because of potential visitor injuries at a job site. In a similar vein, a security services business is associated with a higher third-party injury risk than an accounting firm.
Fortunately, the converse is also true. Businesses with a lower inherent risk will benefit from more affordable business insurance premiums.
Previous Claims History
Every insurance company will look at an applicant’s prior claims history when determining their insurance premiums. Maybe a professional services provider has been the subject of several lawsuits. The insurer may see this as a trend that could very likely continue, charging a higher premium for this additional risk.
Alternatively, one of a courier service’s drivers has had multiple accidents in the past few years. The insurer will likely assess a higher premium than if every company driver had a spotless driving record.
Obtaining the Right Business Insurance
Because each business faces a variety of risk exposures, obtaining targeted insurance coverage is important. Consulting with an experienced insurance professional, such as a Hauser Insurance Group agent, will result in an insurance package that represents a good overall value.
With the coverage in place, the business can confidently market its products or provide its services to its target market.