Insurance law is the name given to practices of law surrounding insurance, including insurance policies and claims. It can be broadly broken into three categories - regulation of the business of insurance; regulation of the content of insurance policies, especially with regard to consumer policies; and regulation of claim handling.
The earliest form of insurance is probably marine insurance, although forms of mutuality (group self-insurance) existed before that. Marine insurance originated with the merchants of the Hanseatic league and the financiers of Lombardy in the 12th and 13th centuries, recorded in the name of Lombard Street in the City of London, the oldest trading insurance market. In those early days, insurance was intrinsically coupled with the expansion of mercantilism, and exploration (and exploitation) of new sources of gold, silver, spices, furs and other precious goods - including slaves - from the New World. For these merchant adventurers, insurance was the "means whereof it cometh to pass that upon the loss or perishing of any ship there followeth not the undoing of any man, but the loss lighteth rather easily upon many than upon a few... whereby all merchants, especially those of the younger sort, are allured to venture more willingly and more freely."
The expansion of English maritime trade made London the centre of an insurance market that, by the 18th century, was the largest in the world. Underwriters sat in bars, or newly fashionable coffee-shops such as that run by Edward Lloyd on Lombard Street, considering the details of proposed mercantile "adventures" and indicating the extent to which they would share upon the risks entailed by writing their "scratch" or signature upon the documents shown to them.
At the same time, eighteenth-century judge William Murray, Lord Mansfield, was developing the substantive law of insurance to an extent where it has largely remained unchanged to the present day - at least insofar as concerns commercial, non-consumer business - in the common-law jurisdictions. Mansfield drew from "foreign authorities" and "intelligent merchants"
"Those leading principles which may be considered the common law of the sea, and the common law of merchants, which he found prevailing across the commercial world, and to which every question of insurance was easily referrable. Hence the great celebrity of his judgments, and hence the respect they command in foreign countries".
By the 19th century membership of Lloyd's was regulated and in 1871, the Lloyd's Act was passed, establishing the corporation of Lloyd's to act as a market place for members, or "Names". And in the early part of the twentieth century, the collective body of general insurance law was codified in 1906 into the Marine Insurance Act 1906, with the result that, since that date, marine and non-marine insurance law have diverged, although fundamentally based on the same original principles.
Sunday, December 16, 2012
Irene Losses Largely Uncovered
Hurricane Irene could take a huge financial toll on eastern seaborad businesses, since insurance proceeds won't fully cover the physical damage or the revenues lost by firms forced to temporarily shut down and dean up, experts said in a report by Insurance News Net.
Irene is putting the spotlight on business interruption insurance, said Michael Jackson , director of marketing for the Newark law firm Podvey Meaner. "Some businesses have it as part of their regular business coverage, but some don't," and all companies should revisit their policies.
Insurance may ultimately cover less than 40 percent of the estimated $7 billion to $10 billion in damages from Irene, according to Maryland-based Kenetic Analysis Corp. Experts said floodwaters reached many properties outside flood-prone areas that don't have flood insurance.
The business insurance issues are complicated, said Richard Sobel , senior vice president of insurance brokerage Cook, Hall & Hyde, in Fair Lawn. He said firms located in high-hazard flood zones may choose, or have the financial obligation, to purchase federal flood insurance, which he suggested provides limited coverage compared to a regular "all-risk" property insurance policy that includes flood coverage.
For example, the federal flood policy's valuation for a loss is "actual cash value" versus a good commercial property contract, where the adjustment is made on replacement cost, Sobel said. And the federal flood policy does not include business interruption protection. A business that's not in a high -hazard flood zone may be able to purchase commercial flood insurance through their commercial property insurer. These policies typically have higher déductibles; however, the limits and coverage typically are superior to federal flood insurance, he said.
Sobel said there is strong evidence that Irene will result in "relatively significant uninsured financial losses, because so many factors come into play, like the true impact on lost business incomes. The thought of how many weeks or months these retail or other commercial businesses may be shut down, and both the financial damage to those directly affected and even those businesses in the surrounding dry areas, is staggering."
How to be There for Clients When Business is Interrupted
In times of natural disasters- i.e. tornado, storms and lightning, wildfires, earthquake, - being there for your clients can be both a tremendously great feeling and a boon for your business in regard to future referrals. In the insurance business, reputation is so vital, being a beacon of help and hope can lead to tremendous success.
One terrific means to do this is to be pre-emptive and create relationships with the disaster recovery team leaders in advance and get their insights on how to help in the claims process. Insureds call us when they've had a negative event, they rarely call or seek help when things are going well so the time to shine is when their lives are in havoc.
Part of that relationship building with the disaster response teams at the insurer, is getting to know the disaster claim process up front. When the disaster hits it is going to be extremely difficult and frustrating to get the answers your clients need. Some key elements of this would include:
Understanding the temporary housing process:
Knowing the timeframes for "typical" disaster claim responses,
Understanding what debris can be removed and how and what needs to stay until it is reviewed, and
Knowing your insurer's appeals process and appropriate steps
Conclusion
Business interruption is definitely one of the most stressful times for any business owner; every day lost is potentially costing them thousands and putting the viability of the business itself in serious jeopardy. Add in the fact that business owners employ others, often dozens or even hundreds of others, and the stress of business interrption can be life-altering. For a few the stress could lead to dire personal health consequences. Providing resources to relieve that stress can make the insurance agent/ consultant a hero to them. Be there, in every way you can.
Irene is putting the spotlight on business interruption insurance, said Michael Jackson , director of marketing for the Newark law firm Podvey Meaner. "Some businesses have it as part of their regular business coverage, but some don't," and all companies should revisit their policies.
Insurance may ultimately cover less than 40 percent of the estimated $7 billion to $10 billion in damages from Irene, according to Maryland-based Kenetic Analysis Corp. Experts said floodwaters reached many properties outside flood-prone areas that don't have flood insurance.
The business insurance issues are complicated, said Richard Sobel , senior vice president of insurance brokerage Cook, Hall & Hyde, in Fair Lawn. He said firms located in high-hazard flood zones may choose, or have the financial obligation, to purchase federal flood insurance, which he suggested provides limited coverage compared to a regular "all-risk" property insurance policy that includes flood coverage.
For example, the federal flood policy's valuation for a loss is "actual cash value" versus a good commercial property contract, where the adjustment is made on replacement cost, Sobel said. And the federal flood policy does not include business interruption protection. A business that's not in a high -hazard flood zone may be able to purchase commercial flood insurance through their commercial property insurer. These policies typically have higher déductibles; however, the limits and coverage typically are superior to federal flood insurance, he said.
Sobel said there is strong evidence that Irene will result in "relatively significant uninsured financial losses, because so many factors come into play, like the true impact on lost business incomes. The thought of how many weeks or months these retail or other commercial businesses may be shut down, and both the financial damage to those directly affected and even those businesses in the surrounding dry areas, is staggering."
How to be There for Clients When Business is Interrupted
In times of natural disasters- i.e. tornado, storms and lightning, wildfires, earthquake, - being there for your clients can be both a tremendously great feeling and a boon for your business in regard to future referrals. In the insurance business, reputation is so vital, being a beacon of help and hope can lead to tremendous success.
One terrific means to do this is to be pre-emptive and create relationships with the disaster recovery team leaders in advance and get their insights on how to help in the claims process. Insureds call us when they've had a negative event, they rarely call or seek help when things are going well so the time to shine is when their lives are in havoc.
Part of that relationship building with the disaster response teams at the insurer, is getting to know the disaster claim process up front. When the disaster hits it is going to be extremely difficult and frustrating to get the answers your clients need. Some key elements of this would include:
Understanding the temporary housing process:
Knowing the timeframes for "typical" disaster claim responses,
Understanding what debris can be removed and how and what needs to stay until it is reviewed, and
Knowing your insurer's appeals process and appropriate steps
Conclusion
Business interruption is definitely one of the most stressful times for any business owner; every day lost is potentially costing them thousands and putting the viability of the business itself in serious jeopardy. Add in the fact that business owners employ others, often dozens or even hundreds of others, and the stress of business interrption can be life-altering. For a few the stress could lead to dire personal health consequences. Providing resources to relieve that stress can make the insurance agent/ consultant a hero to them. Be there, in every way you can.
Insurance for Mobile Professionals
Are you covered? Working naked may be the appeal of telecommuting but you certainly don't want to expose yourself to any risks. Working from home may not be as safe as you think. You are faced with situations you might not have contemplated from your cubicle.
Having a car arrive on your front lawn, power outages and or weather situations are just a few factors that make you aware of the potential risks.
Don't Forget Insurance
Many telecommuters are aware that they require a job suited to telecommuting, appropriate equipment and characteristics in order to succeed. Something that many do not realize or even consider is that they must be aware of insurance concerns and risks. If you are a homeowner, you are likely to have insurance. Some apartment dwellers and condominium renters may not have insurance and you open yourself to great risk without any insurance.
Before you begin your telecommuting arrangement, make sure you take the time to get your insurance in order so that you aren't caught without coverage.
Understand what home insurance covers: Homeowners insurance provides protection for your home, personal property such as furniture, clothing, and appliances as well as for personal liability. It protects you from a variety of events, including fire, lightning, burglary, vandalism, storms, explosions, and more.
Business use of the home is excluded. If you are an employee who telecommutes you are not carrying on a business and that difference must be made clear when speaking with brokers.
Insurance Considerations:
If you are an employee - does the employer have a commercial policy that covers the equipment you have.
If the employer has provided you with the equipment, odds are they will have coverage on the equipment under a commercial policy.
If you are using your own equipment, you will have to talk with your insurance broker to see how you can be covered.
** Regulations will vary depending on the country that you reside. Please check with an insurance broker/agent.
The following applies only to Canadians.
I spoke with Joe Federico, Broker - Dodgson Schaufelberger Insurance Brokers, London ON:
He confirmed that if a company owns the equipment that the employee is using then the Commercial Lines policy should be endorsed to extend coverage to the telecommuter's location or the mobile gear for mobile workers.
For an employee using their own equipment, it may be possible to get a rider that will cover their equipment. It is wise to talk with brokers that work with a large number of insurance companies to get the best results. This will be on a company by company basis on how your coverage will be handled.
If you are an independent contractor - You may be able to get an extension on your Homeowner's Policy. It is best to speak with your Broker and find the best solution. If you are a contractor using Company equipment, then it would be the same situation as an employee and the Company would have their policy endorsed to cover the equipment.
Specific United States Endorsements
HO 2471 endorsement (Business Pursuits):
Provides liability and medical payments coverage for the "business" listed on the endorsement. This is commonly used to pick up liability coverage for mobile workers who have a home office, or work from home. This endorsement specifically excludes a business owned by or financially controlled by the insured. It is intended for employees of other businesses only.
HO 0412 endorsement (Increased Limits on Business Property):
Used to increase the limitation on the standard HO-3 on business property on-premises. This endorsement does not exclude a business owned by the insured, but it DOES exclude: business property in storage, business property held as a sample or for sale or delivery after a sale, and business property pertaining to a business conducted on the residence premises. What is covered? Things such as office equipment that is used for a home office by someone that owns a business, or is an employee of a business that is not being run out of the home.
Anywhere above that refers to "employees of other businesses" would include telecommuters or mobile workers. This is just a basic introduction to some of the insurance concerns that affect telecommuters and mobile workers.
Just a reminder - I'm not a Broker so make you discuss these issues with your Broker in detail and be sure to get covered!
Having a car arrive on your front lawn, power outages and or weather situations are just a few factors that make you aware of the potential risks.
Don't Forget Insurance
Many telecommuters are aware that they require a job suited to telecommuting, appropriate equipment and characteristics in order to succeed. Something that many do not realize or even consider is that they must be aware of insurance concerns and risks. If you are a homeowner, you are likely to have insurance. Some apartment dwellers and condominium renters may not have insurance and you open yourself to great risk without any insurance.
Before you begin your telecommuting arrangement, make sure you take the time to get your insurance in order so that you aren't caught without coverage.
Understand what home insurance covers: Homeowners insurance provides protection for your home, personal property such as furniture, clothing, and appliances as well as for personal liability. It protects you from a variety of events, including fire, lightning, burglary, vandalism, storms, explosions, and more.
Business use of the home is excluded. If you are an employee who telecommutes you are not carrying on a business and that difference must be made clear when speaking with brokers.
Insurance Considerations:
If you are an employee - does the employer have a commercial policy that covers the equipment you have.
If the employer has provided you with the equipment, odds are they will have coverage on the equipment under a commercial policy.
If you are using your own equipment, you will have to talk with your insurance broker to see how you can be covered.
** Regulations will vary depending on the country that you reside. Please check with an insurance broker/agent.
The following applies only to Canadians.
I spoke with Joe Federico, Broker - Dodgson Schaufelberger Insurance Brokers, London ON:
He confirmed that if a company owns the equipment that the employee is using then the Commercial Lines policy should be endorsed to extend coverage to the telecommuter's location or the mobile gear for mobile workers.
For an employee using their own equipment, it may be possible to get a rider that will cover their equipment. It is wise to talk with brokers that work with a large number of insurance companies to get the best results. This will be on a company by company basis on how your coverage will be handled.
If you are an independent contractor - You may be able to get an extension on your Homeowner's Policy. It is best to speak with your Broker and find the best solution. If you are a contractor using Company equipment, then it would be the same situation as an employee and the Company would have their policy endorsed to cover the equipment.
Specific United States Endorsements
HO 2471 endorsement (Business Pursuits):
Provides liability and medical payments coverage for the "business" listed on the endorsement. This is commonly used to pick up liability coverage for mobile workers who have a home office, or work from home. This endorsement specifically excludes a business owned by or financially controlled by the insured. It is intended for employees of other businesses only.
HO 0412 endorsement (Increased Limits on Business Property):
Used to increase the limitation on the standard HO-3 on business property on-premises. This endorsement does not exclude a business owned by the insured, but it DOES exclude: business property in storage, business property held as a sample or for sale or delivery after a sale, and business property pertaining to a business conducted on the residence premises. What is covered? Things such as office equipment that is used for a home office by someone that owns a business, or is an employee of a business that is not being run out of the home.
Anywhere above that refers to "employees of other businesses" would include telecommuters or mobile workers. This is just a basic introduction to some of the insurance concerns that affect telecommuters and mobile workers.
Just a reminder - I'm not a Broker so make you discuss these issues with your Broker in detail and be sure to get covered!
Business Insurance by Dan Ramsey and Judy Ramse
Business insurance is big business! There are many types of risks in business, and for every one there is at least one type of policy. There are policies that protect business owners against loss from fire, theft, natural disasters, customer injury, employee theft, errors and omissions, and many other acts that can injure or destroy a small business.
Following is a short list of the primary types of business insurance policies available to small businesses:
Property insurance pays if specified business property (building, fixtures, inventory) is damaged.
Personal injury insurance covers costs of an injury to people or damage to personal property while on your business premises.
Business income insurance pays if the business loses income due to an uncontrollable event.
Physical damage insurance made to the landlord's property by a customer, employee, or other person.
Employment practices insurance covers damages or settlements based on employment law.
Key insurance protects against the loss (death or disability) of a key employee.
Succession insurance pays the lost share of a partnership on the death of a partner.
Errors and omissions insurance pays if a business principal makes a costly error.
Cyber liability insurance pays on the loss of valuable data due to a computer security breach or catastrophic damage.
These are just a few of the more common insurance products available to small businesses. The most economical choice is to purchase a bundle of common business insurances in a package, sometimes called an umbrella policy. Rates are lower than for individual policies and can give you more protection than à la carte insurance.
How can you find adequate and cost-effective business insurance? Start with whatever company you use for your household and automotive insurance. It may or may not carry a business insurance line. If not, your agent probably can recommend a business insurance agent or company that can advise you. Your business success requires having an insurance adviser you can trust.
How much should you budget for business insurance? The answer depends on many factors—including where your business is located, the value of your business, the risks involved, and what inventory you carry. As a starting point, set aside about 1 to 2 percent of your estimated gross sales for annual insurance premiums on an umbrella policy for a typical small retail store. That's $1,000 to $2,000 annually for gross sales of $200,000.
Following is a short list of the primary types of business insurance policies available to small businesses:
Property insurance pays if specified business property (building, fixtures, inventory) is damaged.
Personal injury insurance covers costs of an injury to people or damage to personal property while on your business premises.
Business income insurance pays if the business loses income due to an uncontrollable event.
Physical damage insurance made to the landlord's property by a customer, employee, or other person.
Employment practices insurance covers damages or settlements based on employment law.
Key insurance protects against the loss (death or disability) of a key employee.
Succession insurance pays the lost share of a partnership on the death of a partner.
Errors and omissions insurance pays if a business principal makes a costly error.
Cyber liability insurance pays on the loss of valuable data due to a computer security breach or catastrophic damage.
These are just a few of the more common insurance products available to small businesses. The most economical choice is to purchase a bundle of common business insurances in a package, sometimes called an umbrella policy. Rates are lower than for individual policies and can give you more protection than à la carte insurance.
How can you find adequate and cost-effective business insurance? Start with whatever company you use for your household and automotive insurance. It may or may not carry a business insurance line. If not, your agent probably can recommend a business insurance agent or company that can advise you. Your business success requires having an insurance adviser you can trust.
How much should you budget for business insurance? The answer depends on many factors—including where your business is located, the value of your business, the risks involved, and what inventory you carry. As a starting point, set aside about 1 to 2 percent of your estimated gross sales for annual insurance premiums on an umbrella policy for a typical small retail store. That's $1,000 to $2,000 annually for gross sales of $200,000.
Business Insurance by Dan Ramsey
For many consulting businesses, risk management includes risk transfer — buying appropriate insurance. Depending on your service business, it can include fire, automotive, liability, and workers' compensation insurance.
Consider purchasing an umbrella business insurance policy that covers numerous risks in one policy. Many have a liability limit of $1 million, $3 million, or $5 million. The premium is usually cheaper than individual policies and can cover you for risks you may not have considered. Speak with a business insurance agent regarding risk and the costs of risk transfer.
Fire Insurance
Fire insurance covers the risk of loss of assets because of a fire or related events. Special protection other than the standard fire insurance policy is needed to cover the loss by fire of accounts, bills, currency, deeds, evidence of debt, and securities.
You can add other perils — such as windstorm, hail, smoke, explosion, vandalism, and malicious mischief — to your basic fire insurance at a relatively small additional fee. Even if you have several policies on your property, you can still collect only the amount of your actual cash loss. Most insurance policies have fine print stating that all the insurers share the payment proportionately.
In most cases, to recover your loss you must furnish within sixty days a complete inventory of the damaged, destroyed, and undamaged property, showing in detail quantities, costs, actual cash value, and amount of loss claimed. If you and your insurer disagree on the amount of the loss, the question may be resolved through special appraisal procedures provided for in the fire insurance policy.
Automobile Insurance
Does your consulting business need auto insurance? The answer depends on whether there is a company car, who uses it, and why. Note that when an employee uses a car on your behalf, you can be legally liable even though you don't personally own the car or truck.
Automobile insurance pays for medical claims, including your own, that come from vehicle accidents, regardless of the question of negligence. In most states, you must carry liability insurance or be prepared to provide a surety bond or other proof of financial responsibility when you're involved in an accident. In addition, you can purchase uninsured motorist protection to cover your own bodily injury claims from someone who has no insurance. In most policies, personal property stored in a car or truck and not attached to it is not covered under an automobile policy.
If you use your personal car for business travel, discuss coverage with your auto insurance agent or company. You may need additional coverage, depending on use. It will also depend on whether the vehicle is used exclusively, primarily, or occasionally for business. Of course, it also depends on who owns the vehicle — you or your company or corporation.
Liability Insurance
Liability insurance is necessary for most businesses, especially those that deal with property or advice that can be misused by a client. Property liability insurance is important if your business has a physical location, such as an office, that is visited by clients or suppliers. You may be legally liable for damages even in cases where you used reasonable care. Under certain conditions, your business may be subject to damage claims even from trespassers.
Note that most liability policies require you to notify the insurer immediately after an incident on your property that might cause a future claim. This holds true no matter how unimportant the incident may seem at the time it happens. Even if the suit against you is false or fraudulent, the liability insurer pays court costs, legal fees, and interest on judgments in addition to the liability judgments themselves.
Workers' Compensation Insurance
Federal laws require that an employer provide employees a safe place to work, hire competent fellow employees, provide safe tools, and warn employees of existing danger. Whether an employer provides these things, he is liable for damage suits brought by an employee and possible fines of prosecution.
State law determines the level or type of benefits payable under workers' compensation insurance policies. However, not all employees are covered by workers' compensation insurance laws. The exceptions are determined by state law and therefore vary from state to state.
You can save money on workers' compensation insurance by seeing that your employees are properly classified. Rates for workers' compensation insurance vary from 0.1 percent of the payroll for safe occupations to about 25 percent or more of the payroll for very hazardous occupations. Office workers employed by consultants typically have very low accident rates and workers' compensation insurance rates are appropriately low. Your business insurance agent can help you determine workers' comp rates and how to keep them low.
Risk is a significant part of doing business. Analyzing and managing risk is a major component of starting and growing a business. Make sure your consulting business identifies its risks and explains how your business will avoid, reduce, transfer, or retain them.
Consider purchasing an umbrella business insurance policy that covers numerous risks in one policy. Many have a liability limit of $1 million, $3 million, or $5 million. The premium is usually cheaper than individual policies and can cover you for risks you may not have considered. Speak with a business insurance agent regarding risk and the costs of risk transfer.
Fire Insurance
Fire insurance covers the risk of loss of assets because of a fire or related events. Special protection other than the standard fire insurance policy is needed to cover the loss by fire of accounts, bills, currency, deeds, evidence of debt, and securities.
You can add other perils — such as windstorm, hail, smoke, explosion, vandalism, and malicious mischief — to your basic fire insurance at a relatively small additional fee. Even if you have several policies on your property, you can still collect only the amount of your actual cash loss. Most insurance policies have fine print stating that all the insurers share the payment proportionately.
In most cases, to recover your loss you must furnish within sixty days a complete inventory of the damaged, destroyed, and undamaged property, showing in detail quantities, costs, actual cash value, and amount of loss claimed. If you and your insurer disagree on the amount of the loss, the question may be resolved through special appraisal procedures provided for in the fire insurance policy.
Automobile Insurance
Does your consulting business need auto insurance? The answer depends on whether there is a company car, who uses it, and why. Note that when an employee uses a car on your behalf, you can be legally liable even though you don't personally own the car or truck.
Automobile insurance pays for medical claims, including your own, that come from vehicle accidents, regardless of the question of negligence. In most states, you must carry liability insurance or be prepared to provide a surety bond or other proof of financial responsibility when you're involved in an accident. In addition, you can purchase uninsured motorist protection to cover your own bodily injury claims from someone who has no insurance. In most policies, personal property stored in a car or truck and not attached to it is not covered under an automobile policy.
If you use your personal car for business travel, discuss coverage with your auto insurance agent or company. You may need additional coverage, depending on use. It will also depend on whether the vehicle is used exclusively, primarily, or occasionally for business. Of course, it also depends on who owns the vehicle — you or your company or corporation.
Liability Insurance
Liability insurance is necessary for most businesses, especially those that deal with property or advice that can be misused by a client. Property liability insurance is important if your business has a physical location, such as an office, that is visited by clients or suppliers. You may be legally liable for damages even in cases where you used reasonable care. Under certain conditions, your business may be subject to damage claims even from trespassers.
Note that most liability policies require you to notify the insurer immediately after an incident on your property that might cause a future claim. This holds true no matter how unimportant the incident may seem at the time it happens. Even if the suit against you is false or fraudulent, the liability insurer pays court costs, legal fees, and interest on judgments in addition to the liability judgments themselves.
Workers' Compensation Insurance
Federal laws require that an employer provide employees a safe place to work, hire competent fellow employees, provide safe tools, and warn employees of existing danger. Whether an employer provides these things, he is liable for damage suits brought by an employee and possible fines of prosecution.
State law determines the level or type of benefits payable under workers' compensation insurance policies. However, not all employees are covered by workers' compensation insurance laws. The exceptions are determined by state law and therefore vary from state to state.
You can save money on workers' compensation insurance by seeing that your employees are properly classified. Rates for workers' compensation insurance vary from 0.1 percent of the payroll for safe occupations to about 25 percent or more of the payroll for very hazardous occupations. Office workers employed by consultants typically have very low accident rates and workers' compensation insurance rates are appropriately low. Your business insurance agent can help you determine workers' comp rates and how to keep them low.
Risk is a significant part of doing business. Analyzing and managing risk is a major component of starting and growing a business. Make sure your consulting business identifies its risks and explains how your business will avoid, reduce, transfer, or retain them.
Small Business Insurance
While the federal government does not require small business insurance, state governments do. Most states require businesses with employees to pay for workers' compensation insurance, unemployment insurance, and state disability insurance. Your state may also require you to carry insurance for activities specific to your business. For example, if you use your car or truck in your business, you may be required to have commercial auto insurance. In addition, your lender will probably require you to carry insurance to protect their investment in your business, like fire or flood insurance.
While insurance coverage is available for every conceivable risk your business might face, the US Small Business Administration (SBA) suggests all business owners discuss their specific needs with an insurance agent or broker. At a minimum, the SBA suggests business owners consider the following insurance coverage:
Insurance for Businesses with Employees
Workers' Compensation Insurance
Businesses with employees are required to carry Workers' Compensation Insurance coverage through a commercial carrier, on a self-insured basis, or through the state Workers'
Compensation Insurance program.
Unemployment Insurance Tax
Businesses with employees are required to pay unemployment insurance taxes under certain conditions. If your business is required to pay these taxes, you must register your business with your state's workforce agency.
Disability Insurance
Some states require employers to provide partial wage replacement disability insurance coverage to their eligible employees for non-work related sickness or injury. Currently, if your employees are located in the states and territories of California, Hawaii, New Jersey, New York, Puerto Rico or Rhode Island, you are required to purchase disability insurance.
Types of Insurance for All Small Businesses
Home-Based Business Insurance
Homeowners' insurance policies rarely cover home-based business losses. Depending on risks to your business, you may add riders to your homeowners' policy to cover normal business risks such as property damage. However, homeowners policies only go so far in covering home-based businesses and you may need to purchase additional policies to cover other risks, such as general and professional liability.
General Liability Insurance
General liability insurance to cover legal problems due to accident, injuries and claims of negligence. General liability policies protect against payments as the result of bodily injury, property damage, medical expenses, libel, slander the cost of defending lawsuits, and settlement bonds or judgments required during an appeal procedure.
Product Liability Insurance
Companies that manufacture, wholesale, distribute, and retail a product may be liable for its safety. Product liability insurance protects against financial loss as result of a defect product that cause injury or bodily harm. The amount of insurance you should purchase depends on the products you sell or manufacture. For example, a book store would have far less risk than a home appliance store.
Professional Liability Insurance
Business owners providing services should consider having professional liability insurance (also known as errors and omissions insurance). This type of liability coverage protects your business against malpractice, errors, negligence in provision of services to your customers. Depending on your profession, you may be required by your state government to carry such a policy. For example, physicians are required to purchase malpractice insurance as condition of practicing in certain states.
Commercial Property Insurance
Property insurance covers everything related to the loss and damage of company property due to a wide-variety of events such as fire, smoke, wind and hail storms, civil disobedience, and vandalism. The definition of "property" is broad, and includes lost income, business interruption, buildings, computers, company papers and money.
While insurance coverage is available for every conceivable risk your business might face, the US Small Business Administration (SBA) suggests all business owners discuss their specific needs with an insurance agent or broker. At a minimum, the SBA suggests business owners consider the following insurance coverage:
Insurance for Businesses with Employees
Workers' Compensation Insurance
Businesses with employees are required to carry Workers' Compensation Insurance coverage through a commercial carrier, on a self-insured basis, or through the state Workers'
Compensation Insurance program.
Unemployment Insurance Tax
Businesses with employees are required to pay unemployment insurance taxes under certain conditions. If your business is required to pay these taxes, you must register your business with your state's workforce agency.
Disability Insurance
Some states require employers to provide partial wage replacement disability insurance coverage to their eligible employees for non-work related sickness or injury. Currently, if your employees are located in the states and territories of California, Hawaii, New Jersey, New York, Puerto Rico or Rhode Island, you are required to purchase disability insurance.
Types of Insurance for All Small Businesses
Home-Based Business Insurance
Homeowners' insurance policies rarely cover home-based business losses. Depending on risks to your business, you may add riders to your homeowners' policy to cover normal business risks such as property damage. However, homeowners policies only go so far in covering home-based businesses and you may need to purchase additional policies to cover other risks, such as general and professional liability.
General Liability Insurance
General liability insurance to cover legal problems due to accident, injuries and claims of negligence. General liability policies protect against payments as the result of bodily injury, property damage, medical expenses, libel, slander the cost of defending lawsuits, and settlement bonds or judgments required during an appeal procedure.
Product Liability Insurance
Companies that manufacture, wholesale, distribute, and retail a product may be liable for its safety. Product liability insurance protects against financial loss as result of a defect product that cause injury or bodily harm. The amount of insurance you should purchase depends on the products you sell or manufacture. For example, a book store would have far less risk than a home appliance store.
Professional Liability Insurance
Business owners providing services should consider having professional liability insurance (also known as errors and omissions insurance). This type of liability coverage protects your business against malpractice, errors, negligence in provision of services to your customers. Depending on your profession, you may be required by your state government to carry such a policy. For example, physicians are required to purchase malpractice insurance as condition of practicing in certain states.
Commercial Property Insurance
Property insurance covers everything related to the loss and damage of company property due to a wide-variety of events such as fire, smoke, wind and hail storms, civil disobedience, and vandalism. The definition of "property" is broad, and includes lost income, business interruption, buildings, computers, company papers and money.
4 Types Of Insurance Everyone Needs
Life throws many unexpected things at all of us. While we usually can't stop these things from occurring, we can opt to give our lives a bit of protection. Insurance is meant to give us some measure of protection, at least financially, should a disaster happen. There are numerous insurance options available, and many financial experts tell us that we need to have these insurance policies in place. Yet, with so many options, it can be difficult to determine what insurance you really need. Purchasing the right insurance is always determined by your specific situation. Factors such as children, age, lifestyle and employment benefits are all points to consider when planning your insurance portfolio. (For related reading, see How Much Life Insurance Should You Carry?)
There are however, four insurances that most financial experts recommend that all of us have: life, health, auto and long-term disability. Each one of these covers a specific aspect of your life, and each one is very important to your financial future.
Life Insurance
The greatest factor in having life insurance is providing for those you leave behind. This is extremely important if you have a family that is dependent on your salary to pay the bills. Industry experts suggest a life insurance policy should cover "ten times your yearly income." This sum would provide enough money to cover existing expenses, funeral expenses and give your family a financial cushion. That cushion will help them re-group after your death.
When estimating the amount of life insurance coverage you need, remember to factor in not only funeral expenses, but also mortgage payments and living expenses such as loans, credit cards and taxes, but also child care, and future college costs.
LIMRA, formerly known as the Life Insurance Marketing & Research Association, says that if the primary wage earner dies in a family with dependent children that family will only be able to cover their living expenses for a few months, and four in 10 would have difficulty immediately.
The two basic types of life insurance are Traditional Whole Life and Term Life. Simply explained, Whole Life is a policy you pay on until you die and Term Life is a policy for a set amount of time. You should seek the advice of a financial expert when planning your life insurance needs. There are considerable differences between the two policies. In deciding between these two, consumers should consider their age, occupation, number of dependent children and other factors to ensure they have the coverage necessary to protect their families. (For additional reading, see What To Expect When Applying For Life Insurance.)
Health Insurance
A recent Harvard study noted that statistically, "your family is just one serious illness away from bankruptcy." They also concluded that, "62% of all personal bankruptcies in the U.S. in 2007 were caused by health problems and 78% of those filers had medical insurance at the start of their illness."
Those numbers alone should urge you to obtain health insurance, or increase your current coverage. The key to finding adequate coverage is shopping around. While the best option and the least expensive is participating in your employer's insurance program, many smaller businesses do not offer this benefit.
Finding affordable health insurance is difficult, particularly without an employer-sponsored program or if you have a pre-existing condition. According to the Kaiser/HRET survey, the average premium cost to the employee in an employer sponsored health care program was around $4,100. With rising co-payments, yearly deductibles and dropped coverage's, health insurance has become a luxury less and less can afford, yet even a minimal policy is better than having no coverage. The cost for a day in the hospital can range from $985 to $2,696. Even if you have minimal coverage, it can provide some monetary benefit for your hospital stay.
As the health care debate continues in Washington, approximately 48 million Americans are without insurance coverage. Check with your employer regarding health care benefits, inquire of any occupational organizations that you belong to regarding possible group health coverage. If you are over age 50, AARP has some health insurance offers available. (To learn more, check out Buying Private Health Insurance.)
Long-Term Disability Coverage
This is the one insurance most us think we will never need, as none of us assumes we will become disabled. Yet, statistics from the Social Security Administration show that three in 10 workers entering the workforce will become disabled, and will be unable to work before they reach the age of retirement. Of the population, 12% are currently disabled in some form, and nearly 50% of those workers are in their working years.
Even those workers that have great health insurance, a nice nest egg and a good life insurance policy never prepare for the day when they might not be able to work for weeks, months or may not ever be able to return to the job. While health insurance pays for your hospitalization and medical bills, where is money coming from to pay those daily expenses that your paycheck covers? Here are a few very sobering statistics regarding disability:
Disability Causes Nearly 50% of all Mortgage Foreclosures, 2% are Caused by Death.
Close to 90% of Disabling Accidents and Illnesses Are not Work Related.
In the Last 10 Minutes, 498 Americans Became Disabled.
If you are injured and off work for even three months, would you have enough in savings to cover your living expenses? Consider what you might face financially if you suffer a major medical condition such as cancer and were unable to work for over a year.
Many employers offer both short-term and long-term disability coverage as part of their benefits package. This would be the best option for securing affordable disability coverage. If they don't, seek out a private insurer. If you aren't sure how much coverage you need, AARP offers a very good disability insurance calculator to help you.
A policy that guarantees income replacement is the optimal policy; more usual terms are replacement of 50 to 60% of your income. The cost of disability insurance is based on many factors including age, lifestyle and health. For group or employer coverage, the average rate in 2009 was about $238 per year or approximately $5 per week. A small price to pay if you are faced with a devastating illness or injury. Disability insurance will guarantee that you will have some income when you can't work.
Auto Insurance
There were over 10-million traffic accidents in the U.S. in 2009 (latest available data) and 33,808 people died in motor vehicle crashes in those accidents, according to data released by the Fatality Analysis Reporting System (FARS). The number one cause of death for American's between the ages of 5 and 34 were auto accidents. Over 2.3 million drivers and passengers received treatment in emergency rooms in 2009, and the costs of those accidents including deaths and disabling injuries was around $70 billion.
While all states do not require drivers to have auto insurance, most do have requirements regarding financial responsibility in the event of an accident. Many states do periodic random checks of drivers for proof of insurance. If you do not have coverage, the fines can vary by state and can range from the suspension of your license, to points on your driving record, to fines from $500 to $1,000.
If you drive without auto insurance and have an accident, the fines will probably be the least of your financial burden. Your car, like your home is a valuable asset you use every day. If your car is damaged in an accident and you have no auto insurance, you will have no way to replace that vehicle unless you have a large savings account, and you don't really want to tap into that savings when auto insurance could cover the cost.
If you, a passenger or the other driver is injured in the accident, your auto insurance will pay those expenses, and help guard you against any litigation that might result from the accident. Auto insurance also protects your vehicle against theft, vandalism or a natural disaster such as a tornado or other weather related incidents.
Again, as with all insurances, your individual circumstances will determine the price of your auto insurance. The best advice is to seek out several rate quotes, read the coverage provided carefully and check periodically to see if you qualify for lower rates based on age, driving record or the area where you live.
The Bottom Line
While insurance is expensive and certainly takes a chunk out of your budget, being without it could lead to financial ruin. Always check with your employer first for available coverage, as this will probably be where you will find the most economical way to of securing coverage. If your employer doesn't offer it, obtain multiple quotes from several insurance providers. Schedule times with agents who offer coverage in multiple areas as they may have some discounts available if you purchase more than one type of coverage. (For additional reading, see Understanding Your Insurance Contract.)
The expense of not having insurance is nothing compared to the expense of living without it.
There are however, four insurances that most financial experts recommend that all of us have: life, health, auto and long-term disability. Each one of these covers a specific aspect of your life, and each one is very important to your financial future.
Life Insurance
The greatest factor in having life insurance is providing for those you leave behind. This is extremely important if you have a family that is dependent on your salary to pay the bills. Industry experts suggest a life insurance policy should cover "ten times your yearly income." This sum would provide enough money to cover existing expenses, funeral expenses and give your family a financial cushion. That cushion will help them re-group after your death.
When estimating the amount of life insurance coverage you need, remember to factor in not only funeral expenses, but also mortgage payments and living expenses such as loans, credit cards and taxes, but also child care, and future college costs.
LIMRA, formerly known as the Life Insurance Marketing & Research Association, says that if the primary wage earner dies in a family with dependent children that family will only be able to cover their living expenses for a few months, and four in 10 would have difficulty immediately.
The two basic types of life insurance are Traditional Whole Life and Term Life. Simply explained, Whole Life is a policy you pay on until you die and Term Life is a policy for a set amount of time. You should seek the advice of a financial expert when planning your life insurance needs. There are considerable differences between the two policies. In deciding between these two, consumers should consider their age, occupation, number of dependent children and other factors to ensure they have the coverage necessary to protect their families. (For additional reading, see What To Expect When Applying For Life Insurance.)
Health Insurance
A recent Harvard study noted that statistically, "your family is just one serious illness away from bankruptcy." They also concluded that, "62% of all personal bankruptcies in the U.S. in 2007 were caused by health problems and 78% of those filers had medical insurance at the start of their illness."
Those numbers alone should urge you to obtain health insurance, or increase your current coverage. The key to finding adequate coverage is shopping around. While the best option and the least expensive is participating in your employer's insurance program, many smaller businesses do not offer this benefit.
Finding affordable health insurance is difficult, particularly without an employer-sponsored program or if you have a pre-existing condition. According to the Kaiser/HRET survey, the average premium cost to the employee in an employer sponsored health care program was around $4,100. With rising co-payments, yearly deductibles and dropped coverage's, health insurance has become a luxury less and less can afford, yet even a minimal policy is better than having no coverage. The cost for a day in the hospital can range from $985 to $2,696. Even if you have minimal coverage, it can provide some monetary benefit for your hospital stay.
As the health care debate continues in Washington, approximately 48 million Americans are without insurance coverage. Check with your employer regarding health care benefits, inquire of any occupational organizations that you belong to regarding possible group health coverage. If you are over age 50, AARP has some health insurance offers available. (To learn more, check out Buying Private Health Insurance.)
Long-Term Disability Coverage
This is the one insurance most us think we will never need, as none of us assumes we will become disabled. Yet, statistics from the Social Security Administration show that three in 10 workers entering the workforce will become disabled, and will be unable to work before they reach the age of retirement. Of the population, 12% are currently disabled in some form, and nearly 50% of those workers are in their working years.
Even those workers that have great health insurance, a nice nest egg and a good life insurance policy never prepare for the day when they might not be able to work for weeks, months or may not ever be able to return to the job. While health insurance pays for your hospitalization and medical bills, where is money coming from to pay those daily expenses that your paycheck covers? Here are a few very sobering statistics regarding disability:
Disability Causes Nearly 50% of all Mortgage Foreclosures, 2% are Caused by Death.
Close to 90% of Disabling Accidents and Illnesses Are not Work Related.
In the Last 10 Minutes, 498 Americans Became Disabled.
If you are injured and off work for even three months, would you have enough in savings to cover your living expenses? Consider what you might face financially if you suffer a major medical condition such as cancer and were unable to work for over a year.
Many employers offer both short-term and long-term disability coverage as part of their benefits package. This would be the best option for securing affordable disability coverage. If they don't, seek out a private insurer. If you aren't sure how much coverage you need, AARP offers a very good disability insurance calculator to help you.
A policy that guarantees income replacement is the optimal policy; more usual terms are replacement of 50 to 60% of your income. The cost of disability insurance is based on many factors including age, lifestyle and health. For group or employer coverage, the average rate in 2009 was about $238 per year or approximately $5 per week. A small price to pay if you are faced with a devastating illness or injury. Disability insurance will guarantee that you will have some income when you can't work.
Auto Insurance
There were over 10-million traffic accidents in the U.S. in 2009 (latest available data) and 33,808 people died in motor vehicle crashes in those accidents, according to data released by the Fatality Analysis Reporting System (FARS). The number one cause of death for American's between the ages of 5 and 34 were auto accidents. Over 2.3 million drivers and passengers received treatment in emergency rooms in 2009, and the costs of those accidents including deaths and disabling injuries was around $70 billion.
While all states do not require drivers to have auto insurance, most do have requirements regarding financial responsibility in the event of an accident. Many states do periodic random checks of drivers for proof of insurance. If you do not have coverage, the fines can vary by state and can range from the suspension of your license, to points on your driving record, to fines from $500 to $1,000.
If you drive without auto insurance and have an accident, the fines will probably be the least of your financial burden. Your car, like your home is a valuable asset you use every day. If your car is damaged in an accident and you have no auto insurance, you will have no way to replace that vehicle unless you have a large savings account, and you don't really want to tap into that savings when auto insurance could cover the cost.
If you, a passenger or the other driver is injured in the accident, your auto insurance will pay those expenses, and help guard you against any litigation that might result from the accident. Auto insurance also protects your vehicle against theft, vandalism or a natural disaster such as a tornado or other weather related incidents.
Again, as with all insurances, your individual circumstances will determine the price of your auto insurance. The best advice is to seek out several rate quotes, read the coverage provided carefully and check periodically to see if you qualify for lower rates based on age, driving record or the area where you live.
The Bottom Line
While insurance is expensive and certainly takes a chunk out of your budget, being without it could lead to financial ruin. Always check with your employer first for available coverage, as this will probably be where you will find the most economical way to of securing coverage. If your employer doesn't offer it, obtain multiple quotes from several insurance providers. Schedule times with agents who offer coverage in multiple areas as they may have some discounts available if you purchase more than one type of coverage. (For additional reading, see Understanding Your Insurance Contract.)
The expense of not having insurance is nothing compared to the expense of living without it.
Subscribe to:
Comments (Atom)