A business owner wanting to choose the best business insurance policies should get a clear picture of the focus and scope of the business and then consult with an agent for a commercial lines broker. Different types of businesses require different types of business insurance policies and an experienced commercial lines agent can help choose the most appropriate coverage. The agent can also obtain multiple quotes from financially sound insurance carriers and explain the differences between the quotes and carriers.
The two most basic coverages found in business insurance policies are property and casualty. Property coverage protects business property from loss or damage. Casualty coverage protects the business from loss or damage it may have caused or for which it may be responsible. The business owner must have an accurate list of the property that needs protection, as well as the value of the property to determine the appropriate coverage. He or she must also be able to report the scope of the business operations to determine the best liability coverage and the premium charged for that coverage.
Business insurance policies are rated based on factors that help the insurance carriers determine the scope of operations and the amount of exposure to loss. The most common rating factors are payroll, gross sales and total square footage. The carriers base the amount of premium charged on one or more of these factors. The higher the payroll, sales or square footage, the greater the exposure to risk and the more premium will be charged to the business owner.
Business insurance policies also include coverages for more specialized property and casualty risks based on the type of business and its operations. If the business makes deliveries or travels to clients’ locations for service or sales, then it may need commercial auto insurance. Commercial auto insurance protects the vehicles owned and operated by the business and provides liability coverage for any loss or damage caused by the operation of the vehicles.
There are also business insurance policies that provide liability coverage for specific situations. If the business manufactures a product or performs service or installation work, it may need insurance to cover any damage caused by faulty manufacturing or installation. This is a type of business liability insurance called products and complete operations coverage.
Many professionals need specialized liability coverage for their businesses. Professionals such as accountants, architects and doctors need to choose business insurance policies that protect them from damage caused by mistakes they may make while performing their specialized services. This type of business liability insurance is called professional liability and includes errors and omissions coverage.
In addition, businesses may own or lease specialized equipment that is not covered under standard property coverage. In that case, it is important to choose policies that provide riders or coverage to protect the equipment. Some business insurance policies cover business property only at a specific location, such as the company’s offices or shop. Coverage away from those locations might need to be added to the property policy separately.
A business owner needs to know the specifics about all of these factors. The more details the business owner can provide to the commercial lines agent, the better the agent will be able to help the business owner choose the best insurance policies. The best policies are the ones that leave no gaps in coverage and protect the business from loss.
