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Frequently Asked Questions

 
Frequently Asked Questions
Question Topics
  Property Insurance
  Liability Insurance
  Workers' Compensation
  Marine Insurance
  Umbrella Insurance
  Errors and Omissions Insurance

One of the best ways to make a smart insurance buy is to be a knowledgeable insurance buyer. The questions and answers below can help you quickly get up to speed about the primary types of business insurance protection you may want to consider for your company.

 


Property Insurance

Q:

What is property insurance?

A:

This type of business insurance protects your buildings, glass, equipment, and business property such as computers, stock, furniture and fixtures, valuable papers and records. Some insurance policies include coverage for equipment breakdown and loss of your business income. Basic property insurance will generally cover your business for losses in the event of a fire, vandalism, or theft, and will typically pay the cost of removing property to protect it from further damage.


Q:

How much property insurance does my business need?

A:

Property insurance can be purchased on the basis of the property's actual cash value (the actual cost of the old item minus depreciation); or its replacement cost value (the cost of replacing the old item with new). Your business insurance agent can help you determine the amount and type of coverage that's right for your business.


Q:

What is business income insurance?

A:

Business income insurance may reimburse you for continuing expenses such as utility bills, as well as net income you would have earned if a covered cause of loss had not occurred. Some insurance policies may also cover losses due to down time or extra expenses needed to restore operations (such as additional property rental). Be sure to check whether your business insurance policy provides this valuable coverage, and if so, whether it would pay for any extra expenses you might incur to get back up and running.

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Liability Insurance

Q:

How does general liability coverage protect my business?

A:

General liability insurance can protect you if an individual or another business claims your company or your employee was negligent and is responsible for bodily injuries, property damage, financial loss, personal injury or advertising injury. Not only can liability insurance pay the cost of covered damages, it can also cover attorney fees and other costs associated with your defense. Given today's litigious society, good liability insurance protection is essential for your business' financial well-being.

Think of all the reasons you could be sued. A client holds you responsible for damage to his or her property that's in your care. A visitor slips and falls on your premises. A competitor or customer sues you for false advertising claims. Your landlord claims your employees were responsible for a fire in your building. All these types of claims and more could be covered by a good general liability insurance policy.


Q:

What exactly does the term bodily injury mean in a liability insurance policy?

A:

This refers to injury, sickness, disease, or even death, of any person that occurs during the policy period.


Q:

What does personal injury mean in relation to general liability coverage?

A:

Someone who holds you responsible for his or her "personal injury" may be alleging a variety of things, none of which are necessarily related to physical injury. He or she could be claiming you are responsible for libel, slander or some defamatory or disparaging material, or for publishing or uttering something that is in violation of his or her right of privacy. Someone could sue you for wrongful entry, or for invading his or her right of privacy. Make sure your liability policy would cover such personal injury claims, including claims resulting from the Cyber world.


Q:

What is employment practices liability insurance (EPLI)?

A:

Employment practices liability insurance is designed to protect employers against claims of employee sexual harassment, discrimination or wrongful termination. Many insurance companies offer Employment Practices Liability Insurance (EPLI) as a stand-alone policy or as part of a Directors & Officers Liability policy. Even "good" employers can be slapped with huge employee lawsuits, so every company should consider adding EPLI to their business insurance program.

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Marine Insurance

Q:

What is ocean marine insurance?

A:

Contrary to what its name might suggest, marine insurance isn't just for "boats." Ocean marine insurance protects ocean transportation exposures, including ships or hulls, goods or cargo, earnings (such as freight, passage money, commissions, or profit), and liability (known as protection and indemnity).


Q:

What is inland marine insurance?

A:

Inland marine insurance can protect goods that are on the move. This includes special types of property that are mobile, of unique value, related to transportation or communication, or otherwise considered to need special protection. For example, if your business routinely ships computers across the country, inland marine insurance could be used to protect your shipments. If you have high value artwork in your lobby, inland marine insurance could be used to protect your investments.

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Umbrella Insurance

Q:

How does an umbrella insurance policy work?

A:

Umbrella insurance is designed to protect business owners against those multi-million dollar losses no company ever wants to have. Once your business is protected by the basic types of insurance coverages (like commercial auto and general liability insurance), you may want to consider an umbrella policy for extended coverage. An umbrella policy would provide additional coverage once the limits of the underlying policies have been exhausted.


Q:

Do I need to have the same insurance company that I bought my basic coverage from be my umbrella insurer?

A:

Although it is not absolutely necessary, having the same insurance company providing the basic coverage and the umbrella will avoid potential coverage gaps and claim handling problems in the future.

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Workers' Compensation Insurance

Q:

What does workers' compensation insurance do?

A:

Most states require that employers provide "workers' compensation" to employees who are injured on the job, or who become ill directly because of their occupation. Workers' compensation insurance helps employers pay for these benefits, including the cost of medical care, lost wages, and rehabilitation services. Workers' Compensation is not a substitute for health or medical insurance, since employees are only covered for on-the-job injuries or illnesses.


Q:

When do I need to buy workers' compensation insurance?

A:

In most states, workers' compensation insurance is required as soon as you have employees. State laws vary, so you'll want to check with your insurance agent or attorney to determine your responsibility.


Q:

Where do I buy workers' compensation?

A:

Almost all states are "open market," meaning that the coverage is underwritten by private insurers. Some states are "closed" or "monopolistic," which means that workers' compensation insurance in these states is underwritten by a state-sponsored fund (ND, OH, WA, WV, WY). In an open market, the rates for workers' compensation insurance, as well as the services included, may vary from one insurer to the next. So it's important to compare both rates and services when shopping for this type of business insurance.


Q:

How much does workers' compensation insurance cost?

A:

The pricing for workers' compensation insurance is based upon your employee payroll, the number and job classification of the employees, classification of your business and past loss experience. Unlike health insurance where the employee may share the cost of this coverage, workers' compensation insurance is paid solely by the employer.

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Errors and Omissions Insurance

Q:

What is errors and omissions insurance?

A:

This type of commercial insurance provides coverage for people who give advice, make educated recommendations, design solutions, provide services or represent the needs of others. "E&O" is sometimes referred to as malpractice or professional liability insurance. But this coverage isn't only needed by doctors, lawyers, and accountants. Errors and Omissions is needed by a wide range of service businesses including real estate agents and brokers, printers, software developers, and consultants. It can be invaluable protection in the event someone claims you incorrectly performed or failed to perform your professional duties.


Q:

What is the difference between "claims made" and "occurrence" coverage?

A:

The terms refer to specific types of policies and conditions under which insurance coverage applies. An "occurrence" policy applies based on when the accident, loss or injury happened regardless of when a claim is made subject to statutes of limitation. A "claims made" policy applies to claims made during the policy period for injuries or damages from covered losses. In this case, when the claim is made is more relevant to coverage than when the loss occurred. Professional liability policies are often "claims made."

 

 
 

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The suggestions and information contained herein are provided for informational purposes only and are not intended to be all inclusive. Please refer to the issued policy for specific details regarding coverages, conditions and exclusions. In the event of a conflict between the terms contained herein and the policy, the policy terms and conditions will prevail.

 

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