Wednesday, October 25, 2017

What Does Small Business Insurance Cover?

As a small business owner, you know the importance of insurance coverage for your business. It helps protect you from financial losses and against specific risks covered by the policy which typically includes fire, wind damage, lightning, falling objects, theft etc.  A normal policy will offer 3 basic types of coverage.

Clothing Store Owner.
https://www.allstate.com/tools-and-resources/business-insurance/small-business-insurance-need.aspx

General Liability Coverage

General liability will cover the medical costs if anyone is injured at your business place due to negligence. Depending on the policy terms, it may also pay for legal costs if you should besued over an accident that occurred at your place of business. General liability coverage is subject to limits. If the medical expenses are in excess to your coverage limit, you may have to pay from your pocket to cover the balance.

Business Property Coverage

Property coverage will protect the business premises (if you own it) from risks that are listed in the policy. For example, if the premises are damaged or destroyed by fire, the policy will help to pay for the repairs or rebuilding. If the furniture or equipment is damaged, destroyed or stolen, the policy will cover the cost of replacement or repair. When buying a small business policy it is important to choose the right deductibles and limits. This means that you can select the amount you will pay yourself before the policy kicks in, and the maximum amount that the policy will pay. As a general rule, higher the deductible, lower the premium.  Because of cash flow limitations, many small businesses make the mistake of keeping deductibles and limits low to reduce the premium outflow. However, saving a few dollars a month could result in paying thousands of dollars from your pocket if damage or loss occurs that is not covered. An insurance agent will be able to help you find the optimal coverage for your business.

Business Interruption Coverage

This will help you to continue operations after a covered peril occurs. It is meant to help in replacing lost income and the higher expenses that arise after your business operationsare affected. For example, if your premises are not usable after a fire, the coverage will help in paying rent for a temporary workplace. This coverage is subject to limits both in terms of the overall dollar amount payable as well as the time period for when it is applicable. Your insurance agent will be able to give you a clear picture of what the limits are to help you to find additional coverage, if you should need it.

Additional Coverage

In addition to these 3 basic coverage, it is often possible to buy additional coverage which can include:

 ·         Data compromise coverage

 ·         Employment practices liability coverage

 ·         Business auto insurance

 ·         Outdoor property coverage

 ·         Equipment breakdown coverage

 ·         Product liability coverage

 ·         Professional liability coverage


Ensure You Are Protected

The loss of your business could have a severe impact on you, your family, and your employees. Small business insurance is a protection to your business and by extension, to the ones who depend on you. The variable coverage limits and options available mean that the best way to get the protection you need, at a cost you can afford, is to consult a professional insurance broker.

Disaster Insurance – What You May Not Know

Hurricane, earthquakes and other natural disasters have been around since the beginning of time. The spurt in the volume and intensity of these disasters appear to be increasing over the years. While part of this may be due to climate change, the expanding population of cities, exponential growth of infrastructure and increasing value of homes are among the major reasons for these massive financial losses. These disasters and the publicity surrounding them have caused homeowners to re-look at their insurance coverage. While the overall policy may appear to offer adequate protection, there are factors that could limit the resources available to repair or rebuild your home.





Issues to Consider

         ·         Your standard disaster policy may not be enough. A typical homeowners’ policy will not normally cover damage from floods or rising water. Some policies pay for damage caused by wind or wind-driven rain but others do not. Some policies issued in areas that are prone to hurricanes include a specific “hurricane deductible” where the policyholder has to pay a large amount from his pocket before the coverage kicks in. For example, if a home valued at $200,000 is destroyed by a fire, the standard deductible is typically from $500 to $1,000. However, under the same policy, if the destruction it is caused by a hurricane, the deductible could be 5% or around $10,000. This is a huge difference. 

          ·         Because of this, you may have to dip into your savings. In the case of earthquake damage, you may need to pay as muchas 15% from your pocket. Without enough cash available, you could be forced to sell off assets to cover the cost of repairs. Ideally, you should have savings set aside for such a contingency or a Home Equity Line of Credit (HELOC) set up to cover you. The HELOC should be set up in advance because no lender will extend credit on a house that has already been damaged.


       ·         Since the standard homeowners insurance does not cover flood damage or loss, taking out flood insurance may be a good idea, depending on the flood risk in your zone. A qualified insurance agent will be able to help you evaluate the risk and find the right coverage. Note that there is awaiting period for this coverage to kick in – it is usually 30 days. This is to discourage people taking out a policy only when a flood threat is imminent. Another factor to keep in mind is that coverage offered by the federal government’s National Flood Insurance Program is limited to $250,000 for property and $100,000 for contents. Additional coverage can be bought from private insurers.


Check Your Coverage

The complexities of insurance coverage mean that it is easy to make mistakes when taking out a policy or misunderstanding the coverage that exists. Talk to a reputed insurance broker about your existing disaster coverage to know if there is a gap that needs to be covered. He will be able to help you stay completely protected.