Often times small businesses would rather take risks and cut costs by avoiding the purchase of business insurance. Getting sued is something that happens to other people. However, this is not the case. In fact, according to an opinion survey conducted by Penn Schoen Berland and Public Opinion Strategies, 43% of small business owners report having either been threatened or faced with a civil lawsuit. While we are not here to provide you with egregious facts on the risks associated with not having business insurance, it is important to understand the value of keeping your business protected.
The fact of the matter is, anyone can be sued and your wages, personal assets and bank accounts are subject to seizure. The smaller your business, the more likely that you can be held liable for debts through your personal assets.
Due to the many risks involved with having a business, insurance polices will help protect your company and your personal assets; two very vital components affecting your livelihood and wellbeing.
What is the difference between general liability and professional liability?
We have all heard of the story of the young woman who spilled her hot coffee and sued McDonalds for damages. This is considered General Liability. General Liability insurance protects your company assets and pays for obligations should a third party get hurt on your property or where there are property damages or injuries caused by your business.
General Liability Insurance will also cover the costs of your legal defense, as well as any settlement or award if you are sued. In addition to third party damages, General Liability can protect you as a tenant if there is damage to property caused by fire or other covered losses.
Professional Liability, also commonly known as errors and omissions, is loss from something you or your employee may "say" that causes damages. For example, as a new consulting company you provide advice that results in the loss of monetary funds of your clients. Professional Liability will protect your company from bearing the full cost of defending against a negligence claim made by the client. It can also cover the settlement or damages awarded to the client.
What is hired and non-owned auto liability?
After being up all night updating Quickbooks and that growing list of emails, you are in dire need of coffee before that 10am meeting. As a result, you send Frank to the coffee shop to pick up one very tall Café Latte. As Frank drives to the store, he passes through a red light and gets into an accident, causing bodily injury.
Hired and Non-Owned Auto Liability will provide bodily injury and property damage to Frank or any employee who gets into an at-fault accident while driving their personal vehicle or other rented or borrowed vehicles on behalf of the company.
While one solution may be to stop sending Frank on errands, a more practical one would be to obtain a non-owned auto liability.
What are the exclusions on a general liability policy?
It is always important to discuss with your insurance agent the details of your General Liability Policy so you have a better understanding of what it does and does not cover. However, thefollowing are a couple of items that are not covered:
- While it goes without saying, intended injury (if you do something on purpose) it will not be covered by General Liability insurance.
- If you own a restaurant, liquor liability is not covered.
- Workers Compensation and similar laws are not covered.
How does my loss ratio affect business insurance premiums?
Much like personal insurance, the more frequent or severe claims you incur, the more likely your insurance premium will rise. More often this affects mid to large businesses but it can certainly have an affect on small businesses as well.
The most effective way to control the cost of your premium is to proactively prevent losses before they occur. Talk to your insurance agent on ways to reduce risk and cultivate a safe working environment.
Pettineo Insurance Agency, Inc. is your neighborhood independent insurance agent. As an independent agent we represent many top rated companies in both the personal and commercial lines. Our objective is to identify and minimize our clients' exposure to risk. We reach these goals with emphasis on quality coverage, competitive premiums, and overall simplification of insurance matters.
