10 Types of Insurance Coverage Every Small Business Should Have

As a small business owner you are vulnerable to losses if you lack proper insurance coverage. Consequently, there are 10 types of insurance coverage every small business should have.

1. General Liability
Every business, even home-based operations, requires general liability coverage.  If your product or service causes damage to a third party, general liability covers your defense costs and damages if awarded for bodily injury or property damage.

2. Property Insurance
If your business has personal property like inventory, tools, or computers then property insurance covers for theft, fire, and other losses. You should also consider adding to this policy, loss of earnings/business interruption coverage in case you are unable to operate during a loss.

3. Commercial Vehicle Insurance
A Houston commercial insurance policy will cover tools, inventory, etc., which are being transported as well as covering for damages and collisions. Note: personal auto insurance will not cover items being transported for business purposes.

4. Worker’s Compensation
If you have employees, worker’s compensation insurance is the law.  More importantly, proper coverage protects you and your personal assets if an employee is injured on the job.  This insurance covers medical costs and wage loss for the employee, and waives the employee’s right to sue your business if a loss occurs when they accept these benefits.   

5. Errors and Omissions
Also known as professional liability insurance, this type of policy covers your defense and any awarded damages in the event that you fail to render your services, or inadequately perform them.  General liability does not cover this type of loss, so if your business provides a service it is very important to consider this policy.

6. Data Breach Insurance
In today’s technologically advanced world, data breaches can and do occur.  If you store personal or non-public information about your clients or employees on your computer systems or paper filing systems and the information gets into the wrong hands, this coverage will protect your business from the losses that may follow.

7. Life Insurance
As a business owner with financial obligations, life insurance provides you with peace of mind knowing your family will be protected against financial burden in the event of your passing.

8. Home Owner’s/Renter’s Policy
This coverage protects against losses for physical property damage, contents and personal injury within the premises.

9. Directors and Officers Insurance
If a lawsuit is filed against a director or officer of your business, due directly to their actions related to your business, this coverage will protect against defense costs and damages.

10. Personal Umbrella Insurance
Additional coverage may be purchased in the event your liability insurances are exceeded during a loss.  Depending on the nature of your business, this can prove invaluable in a loss situation. Call ABM Insurance at 800-362-2809 to discuss your insurance requirements and get a free quote on a policy bundle that will protect you and your business.

General Insurance: 7 Basic Tenets

Insurance contracts are an exchange of risk. In return for the premium payment, the insurance company promises to compensate the insured for a loss to person or property. By pooling small payments from many customers, the insurer can extend large amounts of coverage. To make sure both parties are treated fairly and can trust the transaction, the industry has seven basic tenets of general insurance.

1.  Principle of Uberrimae fidei (Utmost Good Faith):  Both sides, the insured and the insurer, must act with good faith. Each party must give honest information and make thorough disclosures.

2. Principle of Insurable Interest:  The person seeking to benefit from the insurance must have sufficient ownership in the object, property, or interest being insured. For example, you can't take out insurance on your neighbor's house unless you own it.

3. Principle of Indemnity:  The insurer agrees, within the limits of the scope of coverage, to cover the loss. In short, the insurance company promises to "make good the loss" and restore the insured to where they were before the claim.

4. Principle of Contribution:  The insured can only recover for actual losses, even if the loss is less than the limit of coverage. If there are multiple policies, the insured can't double or triple dip. You can't make a claim for the same loss to two different insurers.

5. Principle of Subrogation:  When the insured is paid for a loss resulting from the fault of another, the insurance company has the right to seek legal recourse from that person. In short, if your car is totaled by a drunk driver and the insurance company pays your $10,000, then the insurer has the right to sue the negligent driver to recover the costs of the claim.

6. Principle of Loss Minimization:  The insured has a duty to reduce the chance of loss and to mitigate the loss. If your house catches on fire, you have a duty to call the fire department. After a loss, you have a duty, if possible, to secure the property and prevent further damage.

7. Principle of Causa Proxima (Nearest Cause):  If there is loss because of more than one reason, the insurer must look at the damage caused by the closest factor when paying the claim. For example, your street is flooded during a storm. Your house suffers only minor water damage, but catches fire because of downed power lines. You are insured for fire, but not for flood. The insured must pay the claim because you are insured for the closest or proximate cause of the damage.

The seven general tenets of insurance, at its base, is a code of ethics for both parties to the insurance contract. Any questions? Call ABM Insurance & Benefit Services, Inc. at 800-362-2809 today to review and discuss Houston business insurance or other types of insurance.

Does Your Company need Business Interruption Insurance

A threat that faces every business owner despite of location, industry, product or service, is one of business interruption after a disaster. Without the ability to continue business for an unclear period, the owner could face increasing debt, no income and they may even lose the ability to gain financial footing through their future business prospects.

Usually, business interruption insurance will cover earnings that a company will lose over a set period of time following an insurable event, such as a fire or hurricane. Some policies may also include:

·         Extra expense coverage: If you have to run your business out of a temporary location as you repair and rebuild, you may have extraordinary expenses, which would be covered under this benefit.

·         Contingent business interruption: It’s probable that the insurable occurrence which hurts your business didn’t actually have an effect on your business location, but that of your supplier. If your business experiences a loss due to an incident at your supplier’s location, then this would cover the damages within the specified period and limits.

Together, these benefits can help you to continue to pay payroll and meet your financial obligations while conducting your business in a temporary location or waiting out the repairs to your office.

Getting Coverage

You may be able to secure business interruption coverage through its own policy, or as a piece of your commercial property insurance policy or BOP (business owner’s policy). When applying, you should consider what your losses could actually be before you pick your limit. Consider your gross profits and think about potential sales losses in terms of future sales trends as well as current and past sales experience. Talk to your agent about how your gross earnings fit in with the insurer’s coinsurance requirements, because if you underinsure your insurer could penalize you when you have a loss by reducing your claim payout by the percentage that you underinsured, even if your claim is less than or identical to your limit.

In addition, consider the expenses that you will reasonably be able to suspend while your business is out of service. If you lease your space then you may not need to pay rent during the months that the area is inaccessible and being rebuilt. But you may be forced to pay rent again once the space is restored, even if you need to spend that time restocking.

Business interruption insurance can be a reasonably priced, but important piece of your Houston commercial insurance plan. Give us a call at 888-356-6448 today to talk about just how much it can help defend your business.

Types of Business Personal Property Coverage

In order to protect property owned by your company it’s wise to invest in Business Personal Property Coverage. For your commercial property to be covered it must be on or within a building in the business premises. Items in a vehicle or items located within 100 feet of the business are also covered.
There are a total of five different classes of items covered:

• Property of others that is in the care, custody or control of the insured: Some businesses, like repair shops, hold onto the property of their clients while they are working on it or with it for business purposes. This property can still be damaged or stolen while in the business’ possession and, therefore, needs to be covered so that the business is not liable for its customer’s losses.
• Leased personal property with contractual requirement to insure: Not all equipment used by a business might be owned by them. Instead, many businesses lease or rent bigger, more expensive items like computers, copiers or machines. In this case, if a lease or rental agreement contract requires that the business owner insure the property, it becomes covered under the business personal property coverage.
• Tenants improvements and betterments: If you rent or lease your office or retail space, and you make improvements to that space by adding shelves, lights, or other fixtures and alterations, then tenants improvements and betterments will reimburse you for the value of these improvements if they are lost or damaged in an insurable incident. Remember, the property owner’s business insurance policy will not cover your property or betterments.
• Exterior building glass: This class is also for tenants of buildings. Many businesses have special, decorated and lettered glass for their business’ front. If this glass is damaged in an insurable incident, it might not be covered by the property owner’s policy since it is considered under your care and custody as the lessee or renter.
• Property owned by the business and used in the business: Most contents or property will probably fall into this category. It covers all property and equipment that was purchased by the business and used in the business. This could mean machines, computers, ovens, etc. There may be special exclusions or conditions for property that is used for both personal and business needs.

Your business is your ticket to success and financial freedom. Protecting it with the right insurance coverage ensures that your business will continue to provide for you after an insurable event. You can also be assured that you will not lose your personal assets trying to recover from one.Call us today at 888-356-6448 for a free Houston Business Insurance quote.