What should I choose?

Starting a business can be a daunting effort. Incorporation, marketing, location, employees, products, insurance…. It can be very overwhelming. So we will try and simplify the insurance parts of your journey.

Most companies that you will be working for, will require you to provide them with proof of insurance. They may ask for a Certificate of Insurance, or to be added as an Additional Insured. And often I talk to people who have no idea what these companies are asking!

When you start a business, often you will have an association with another larger business. You will provide the larger business with a service and that business pays you. The larger business is going to require that you provide proof that you have coverage. This is done by purchasing an insurance policy for your business. Proof of that coverage is provided by the agent or carrier, with a Certificate of Insurance.

There are other instances where the other company will require to be added as an Additional Insured. This is done so that in the event of a claim, both you and the Additional Insured, would be represented under your policy. Only after your policy limits are exhausted, would their policy be brought into the claim.

Types of Insurance

General Liability: Sometimes this is referred to as a “slip and fall” policy. This type of coverage provides protection in the event of Bodily Injury or Property Damage. You are purchasing a policy to ensure that anyone or anything that becomes damaged, in the course of your business, is protected. As a Carpenter, you or an employee drops a hammer on someone, or something, the resulting damage would be covered under this type of a policy. In almost all cases, when you are asked to provide proof of coverage, this is what you are being asked to prove.

Professional Liability: This can also be called Malpractice, or Errors and Omissions. The specific name primarily relates to the profession being afforded coverage. This type of policy would provide protection for your professional work, efforts or opinion. A consultant who offers suggestions and advice would be an example of someone needing Professional Liability.

Business Owners Policy: This type of coverage reflects a combination of coverages. Typically, a Business Owners Policy, or BOP, will include Liability, Property and Business Property among a collection of other coverages. A similar example would be a persons Homeowners Policy. That too covers the persons liability, building and contents. A BOP can be seen as a similar type of policy for your business. Most carriers have limits on the size of the company they will insure under this policy type. For larger companies, an advanced type of coverage, Commercial Package Policy is used.

A BOP affords a business owner coverage for their liability exposures, the building, if the business owns it, the business property (desks, computers, phones, etc.), and business products (sale items). Other coverages offered may include, theft, ERISA, Employer Practice Liability, Non-owned Auto, among others. Many of these extra coverages are included at no additional cost. This is something you should review carefully with your agent to determine what coverages are included.

Commercial Auto: Any business that owns a vehicle required to have tags and registration requires Commercial Auto. This can extend from a one person business, that provides a vehicle to the owner/employee, to a business having several delivery or service vehicles. Commercial vehicles can be your car to a tractor trailer to a dump truck. Every vehicle will have a different use. Expect to be asked what areas the vehicle is driven on average basis, how it is used (do you take it to a job site and park it there all day or are you making deliveries?), and who drives the vehicle.

Workers Compensation: This insurance may be required by state law. In some instances, a business you are contracted with, may also require proof of your Workers Compensation policy. They may even require this coverage, even if, under state law you are exempt. This is a contract issue and you should review what coverages you need with your agent. This policy is designed to provide coverage for any employee that is injured on the job. Injuries can range from Carpal Tunnel to being seriously hurt; provided the employee was injured in the course of doing their job or as a representative of the company, your business could be held liable for their injuries.

Marine Insurance: Marine Insurance here, is fairly limited to coverages related to boat/ship ownership. In this instance, you could be a person, or a business. Marine coverages would be similar to your auto policy, but affording coverage specific to your vessel.

Group Health: Many businesses offer some form of benefits to their employees. A Group Health policy allows a business to select Health Care coverages to offer as a group. There have been numerous changes in this area, and some carriers can recognize a group as having only 2 members. An agent can guide you through the selection of Health, Vision, Dental and other coverages.

We hope this has helped you to better understand the types of coverages we described. It is important to recognize this is a layman's explanation, and an Insurance Professional is best qualified to assist you in determining proper coverage for your exposures.