Business Insurance: Understanding What You Need
Business insurance is critical and it can also be difficult to understand. With this short article, we’ll sort out some of the differences between the types of business insurance that are common today.
The first part of any business insurance program is what we call a Property and Liability policy. Typically, it is a single policy, sometimes called a BOP or a Business Owners Policy or a package policy. The reason it’s called a package policy is because it packages property insurance with liability insurance together.
So, what’s property insurance? For lack of a better term, it’s your stuff! It’s inventory, it’s desks, it’s anything that you sell or anything you need in your office or in your operation. That’s what we mean by “stuff.”
Liability insurance is if something goes wrong and you get sued. A customer comes onto your premises and slips and falls, or if you sell a product that hurts a customer (which would be a product liability.) These are the core of most insurance policies for most businesses.
Next is a Workers Compensation policy. This is a social contract between employers and employees that basically says that employers will take care of the medical expenses and lost wages if the employees get hurt on the job. This is all driven by states, so workers comp is what we call statutory – meaning the actual benefits are determined not by the insurance company but by the state in which the accident may occur (typically where the business is located.) Pennsylvania’s statutory workers compensation is a little different from Maryland and Maryland is a little different from Delaware – so, each state has their own workers compensation.
Other types of business insurance that are common today (depending on what you do) are:
Professional Liability (or Errors & Omissions) This is if you make a mistake that ends up harming your client, that mistake is considered an error and your client can sue for professional liability. This type of liability is very common for professionals like lawyers, engineers and architects. Medical malpractice is also a form of Professional liability for doctors.
Directors & Officers Liability is to protect directors and officers for business decisions they may make about the company.
Employment Practices Liability (EPLI) provides protection in case you fire someone and they come after you claiming discrimination or some other kind of allegation.
These are the Business Insurance basics. For more on your business insurance and to make sure you are paying the right amount for your insurance but still have the right amount of coverage, call us today and ask for Liz Martin or Amy Marberger. We look forward to working with you!
