The Importance Of Commercial Insurance

Small and medium sized businesses need help when it comes to managing risk, and this can be done with commercial insurance. These policies can help to protect the business and ensure long term growth. There are, unfortunately, many business which have collapsed due to lawsuits, where they lacked the right insurance. It is of paramount importance that modern businesses are fully covered, especially in the age of litigation.

There are numerous different aspects of insurance for businesses and the parts required will be based on the needs of the business, the industry, the state laws, and the customers served by the business. Business insurance can be very broad and range from covering product defects to employee injury.

There are also various insurance policies which are required by law. The requirements are based on the industry. For example, insurance is required for lenders and landlords. Having the right type of insurance, as well as the right amount of insurance, will help to avoid any problems.

Overall, commercial insurance is limited in both the range of liabilities covered, and the maximum amount in damages which is covered for each liability. Knowing the extend of, and the limit of each liability cover is vital as it may need to be expanded based on the growth of the business. This can be done with actions such as buying an umbrella, which increases the liability cover. It is best to speak to an insurance professional should the needs to of the business change.

Insurance in this category will cover actions such as property damage, bodily injury and injury caused by advertising. Many premiums also have certain exclusions which should be known before the premium is agreed to. An exclusion will reduce the number of liabilities covered by the policy.

The limits of an insurance policy are all interrelated, which can have consequences should multiple claims be made on a business. For instance, if one claim is paid for damages, then it will effect the limits on the rest of the policy. It should also be noted that the general commercial liability will remain the same regardless of the number of people claiming against the business.

There are some important factors to understand before taking out insurance. Of particular importance is the occurrence limit. This is the maximum amount of money that will be paid to any single claim based on medical payments and bodily damage. The general aggregate limit is also essential to understand, as this is the total figure that will be paid out for all the damages incurred across the entire insurance policy (during the period under contract). This means that should the total amount be met, the insurance company will not make any further payments on damages.

There are also a number of other categories, but those mentioned above are the most important to understand and discuss with an insurance professional. Seeking professional advice is always recommended as a means to obtain the correct level of coverage, and to have the maximum protection possible.

Product Liability Insurance Explained

Businesses from all industries should think realistically about the prospect of being sued, as it is becoming more common in the modern world. Having product liability insurance is one way to protect the business from claims which relate to the sale or manufacture of products to the public (such as food, medicines or other consumables).

Having insurance like this will cover the business liability should a buyer or bystander suffer losses or injuries based on product malfunction or based on a product defect. One such example is when a product is defective but the manufacturer fails to alert buyers. In such cases, the manufacturer and the seller will be liable for the effects. There have been some famous cases in past decades when automobile manufacturers faced a slew of claims due to the safety issues with the vehicle.

Many resellers do not take out coverage as they assume they cannot be held liable, but this is not the case. Anyone selling a product, retailing, and those “middlemen” can be brought into a lawsuit if it brought by a customer. Simply claiming that they are not at fault, as they did not manufacturer of the product, will not get them out of legal troubles.

There is a term known as “stream of commerce” liability, which means that any individual or business involved in the placement of the product on the market can be held liable for any damages which befall the customer or end user of the product.

Companies who provide products to the public need to have product liability insurance. There are sometimes cases when this coverage is present in general business insurance, but this is not always the case. As such, companies should speak to their insurance companies to check for complete coverage. This is the reason that having a good working relationship with an insurance professional is essential in business.

When looking for premiums to cover the business, there are many aspects and facets involved. The premium will be based on the type of the product sold by the business, as well as the role played by the insurer in the entire business process. Besides this, the volume of sales will be a factor as this has a major impact on the likelihood of claims from the end users.

Businesses should never try to cut corners when taking out insurance, or give false figures, as this will simply backfire and void the entire premium. It is vital that companies do not under-report the volume of sales or only report a small number.

Likewise, it is very important that the actual products being sold are correctly categorized and insured under the correct headings. Different products come with a greater premium because of the higher risk involved and the potential for damages being claimed.

Having this form of insurance is vital for businesses to stay afloat and deal with any claims that are brought by the general public. Failure to identify the correct premium can be very costly.

All About Business Interruption Insurance

Business interruption insurance is a constructed portion of broader types of policies for commercial insurance. This specific coverage is generally located in insurance policies for commercial property and BOP (business owner’s policies).

It can only be triggered within three types of limited circumstances that include the following:

  1. The physical damage that a property sustains is so severe that the company has been forced to stop operating.
  2. Physical damage to other types of property that has occurred from loss that would have been covered by the company’s insurance. This damage has partially or totally prevented employees or customers from being able to gain access into the company premises.
  3. Government has made the decision to shut an area down caused from property damage that has been caused by perils that are covered by a business’s insurance policy that now prevents employees or customers from being able to access the premises.

Even after covered events occur, many policies will state that there are waiting periods that are usually up to several days. This waiting period will need to progress before the insurance is activated. Once this insurance is active, the coverage will not be retroactive in regards to the exact day of the accident or event.

The coverage will be limited, especially once waiting periods have expired. The coverage can be used for expenses related to temporary relocation, loss of net income and for ongoing expenses like payroll that will allow the company to carry on paying their employees opposed to letting them go.

The coverage is never open ended. This type of coverage is only available as long as it may be necessary in order for the company to be in full operation again. The coverage will generally not extend past 12 months. Additionally the company will need to provide all losses related to business interruptions to their insurer.

Insurance For Business Interruptions Is Limited

It is important for business owners to understand that the coverage involved in business interruption should not be regarded as a “blank check” that can be used for every type of business disruption. Added to the above mentioned limitations, this coverage has restrictions that include the following:

Suspension Of Operations

Cessations, slowdowns and suspensions that are considered to be a covered event will be covered.

Net income that is lost caused from unfavorable business conditions after a loss will not be covered by business interruption insurance.

Misconceptions

One of the misconceptions that have arisen is that this coverage does not serve a useful purpose. However, this type of insurance can provide vital protection in the circumstances that a company undergoes an event that they are unable to control.

The primary purpose of this insurance is essential in protecting a company from losses that come about due to the inability to operate normal operations and the inability for customers or employees to enter or occupy the company premises. This insurance can save a company from going under.