1. Small Business
The Importance, Need and Why
Business Insurance
Presented by:
Terina Lancaster – The Shults Insurance Agency

2. Business Insurance: An Overview
If you own a business then you should have business insurance. The
importance of business insurance is to protect your business from any
losses that may occur.
You first want to look at an insurance plan that best fits your needs, by
looking at the risks involved in your business and how the coverage
could help you in case of an unfortunate incident should take place.
The purpose of business insurance is to safeguard you from burning a
hole in your pocket and put you back to whole. There are several types
of insurance which come under this category.

3. Business insurance provides a safety net for your company (large or
small). When you think about growing, keep in mind that new types of
insurance will be required, but they will all increase your safety net. It
may seem like a lot of additional time and effort, at first, but mental
knowledge of your safety net will allow you to make more sound,
responsible decisions for growing your company.

4. General Liability Insurance
Every business, including a home-based business, should have liability
insurance. General Liability provides for both defense and damages if
you, your employee(s), your products or services cause or are alleged
to have caused Bodily Injury or Property Damage to a third party.

5. General Liability Insurance
The Purpose of General Liability insurance (also known as Commercial General
Business Liability) protects a company’s assets and pays for obligations – medical
costs,
for example –if someone gets hurt on your property or when there are property
damages or injuries caused by you or your employees. Liability insurance covers the
cost of your legal defense and any settlement or award should you be successfully
sued. Typically these include compensatory damages, nonmonetary losses suffered
by the injured party, and punitive damages.
General liability insurance can also protect you against any liability as a tenant if
you cause damage to a property that you rent, such as by fire or other covered loss.
It can also cover claims of false or misleading advertising, including libel, slander,
and copyright infringement.

6. Property Insurance
Every business which has a standard building, needs to have a property
insurance coverage. This type of business insurance covers damage or
loss to the company’s property, which resulted due to fire, vandalism,
wind, hail or even theft. The building, documents, money, lost income
and equipment fall under the category of company property. In case
the business is home-based, a similar plan can be customized to meet
the needs of the business, instead of opting for a home owner’s
insurance which wouldn’t cover particular losses like business
interruptions or lost income.

7. Business owner’s policy (BOP)
A business owner policy package all required coverage a business
owner would need. Often, BOP’s will include business interruption
insurance, property insurance, vehicle coverage, liability insurance, and
crime insurance . Based on your company’s specific needs, you can
alter what is included in a BOP. Typically, a business owner will save
money by choosing a BOP because the bundle of services often costs
less than the total cost of all the individual coverage’s.

8. Commercial Auto Insurance
Commercial auto insurance protects a company’s vehicles. You can
protect vehicles that carry employees, products or equipment. With
commercial auto insurance you can insure your work cars, SUVs, vans
and trucks from damage and collisions. If you do not have company
vehicles, but employees drive their own cars on company business you
should have non-owned auto liability to protect the company in case
the employee does not have insurance or has inadequate coverage.
Many times the non-owned can be added to the BOP policy.

9. Work Comp
The purpose of Work Comp is to provide insurance to employees who
are injured while on the job. This type of insurance will provide wage
replacement and medical benefits to those who are injured while
working. In exchange for these benefits, the employee gives up his/her
right to sue his/her employer for the incident. As a business owner, it is
very important to have worker’s compensation insurance because it
protects yourself and your company from legal complications. State
laws will vary, but all require you to have workers compensation if you
have W2 employees. Penalties for non-compliance can be very stiff.

10. Disability Insurance
New York is one of a handful of states that require employers to
provide disability benefits coverage to employees for an off-the-job
injury or illness. Coverage for disability benefits can be obtained
through a disability benefits insurance carrier who is authorized by the
New York State Workers' Compensation Board to write such policies.
Disability benefits are temporary cash benefits paid to an eligible wage
earner, when he/she is disabled by an off the job injury or illness. The
Disability Benefits Law (Article 9 of the WCL) provides weekly cash
benefits to replace, in part, wages lost due to injuries or illnesses that
do not arise out of or in the course of employment.

11. Professional Liability Insurance
Professional Liability insurance is also known as Errors and Omissions
Insurance. The policy provides defense and damages for failure to or
improperly rendering professional services. Your general liability policy
does not provide this protection, so it is important to understand the
difference. Professional liability insurance is applicable for any
professional firm including lawyers, accountants, consultants, notaries,
real estate agents, insurance agents, hair salons and technology
providers to name a few..

12. Directors and Officers Insurance
Directors and Officers insurance protects the directors and officers of a
company against their actions that affect the profitability or operations
of the company. If a director or officer of your company, as a direct
result of their actions on the job, finds him or herself in a legal
situation, this type of insurance can cover costs or damages lost as a
result of a lawsuit.

13. Mistakes to Avoid While Purchasing Business
Insurance
Every business, whether small, medium or large, is exposed to risks.
You can rule out these risks by purchasing business insurance which
covers for the loss of revenue. You should, however, choose the right
insurance which is suitable for your business.

14. Right insurance protects your finances:
• Irrespective of the size and type, every business has the possibility of facing
risks; they can either be man-made or natural. Natural risks include floods,
heavy rains, violent winds (storm, gales, hurricanes and the like), lightning
and the manmade risks include vandalism, theft, accidents at workplace
resulting in casualty, loss of business data, inadvertent leakage of data and
so on.
• To choose the most suitable insurance for your business, taking into
account the nature of your business is very important. While purchasing
business insurance, you need to consider things like products/services you
offer, the customer base, availability of raw materials, whether the product
needs new design/method, or any other issue that may potentially be a risk
factor for your business.

15. Avoid the following mistakes while purchasing the
insurance.
Underestimating the importance of business insurance:
Every business has its own risks. You should not underestimate the risks your
business may face. However small the risk is, you should purchase the right
type of insurance for your business. Purchase the insurance even if your
company finances are good enough to withstand the risk.
Getting attracted to low priced policies:
Don’t mistake low priced policies for cost effective policies. The low premium
might be because the risk it covers is low. If this is the case, it might be
troublesome to you in the event the expenses of compensation exceed your
policy coverage. You need to take an insurance coverage that is, sufficiently
more than the probable claim for compensation.

16. Under or over insuring:
Avoid under insurance, it may lead to considerable loss to your
business. This is because under-insurance cannot cover all the
expenses that you have to bear in the event of claim. Purchase an
insurance coverage that is adequate for you and your business.
Over insurance will also not help you. It leads to more expenses. At
times you might be tempted to buy business insurance that seems less
expensive. But, in reality the insurance coverage that is less expensive
may not cover the type of risk that your business may face.

17. Buying insurance from brokers/agents with no/less
knowledge:
Purchasing insurance is not an easy task. It requires great deal of
research. Choose a broker/agent who specialize in business insurance.
Ensure you choose the one that has a good track-record in claims
settlement and servicing the users.
Consider purchasing insurance from a broker. Look for an insurance
broker that has the experience, knowledge, a good reputation, and
who will provide you the best service at optimal costs. You should avoid
brokers/agents with lower credibility.