What kind of insurance do I need for my business?
Business insurance is one of the most important expenses a business should have. However, what type of insurance and how much coverage is needed should be evaluated based on your individual business structure and purpose. As your business grows or ages, the types and coverage amounts may change and thus, the topic of insurance should be revisited periodically as any number of business circumstances can change insurance requirements. The San Luis Obispo business attorneys at Toews Law Group, Inc. can help determine the best insurance coverage for your business or recommend the right professional to guide you through this process.
Being over-insured can be costly by diverting funds that could be put to better use in other areas of your business. However, being under-insured is risky, and in some cases, could result in you or your business being on the hook for expensive out-of-pocket settlements, judgments or penalties.
What types of policies exist?
The most common types of business insurance include:
- General liability insurance
- Professional liability insurance (errors and omissions)
- Business owner policies
- Workers compensation insurance
General liability insurance
Also referred to as commercial general liability, this type of insurance protects your business from claims made by persons against your business, including claims for personal or bodily injury. These policies often provide payment to parties damaged by your business, including your employees – these damages may include medical expenses, lost wages claim or damage to their personal property. Additionally, this type of policy may require your insurance carrier to hire and pay for an attorney to represent your business against the claimant.
Some examples of how general liability insurance can protect your business include:
- Personal injury—A member of your sales team makes some unflattering comments about a competitor during a meeting with a client. The comments get back to the competitor. Your salesperson and your company are sued for slander. General liability insurance should cover the hiring and payment of attorneys hired to defend your business and pay the claim, up to the amount of coverage available under the policy.
- Bodily injury—This is the coverage that pays claims when someone is injured at or by your business property or employees. This may include coverage for a customer who slips and falls in your store or the damage caused by your employee who accidentally causes an automobile accident causing a third party to be physically injured while delivering your goods using your company vehicle.
- Property damage or loss—One of your delivery trucks accidentally backs into a customer’s forklift, damaging it beyond repair but causes no injury to a person. This type of insurance should cover replacing the forklift.
Professional liability insurance
Sometimes referred to as an errors and omissions policy, this type of insurance covers you from claims brought against you, your business or your employees after giving negligent acts or inadequate advice or recommendations given to the claimant. An example of this is a Certified Public Accountant (CPA) negligently advises on a tax matter that causes you substantial taxes that could have otherwise been avoided but for his err. This type of policy may also provide you with coverage in a case where your company issued but that your company was not at fault – a professional liability insurance policy may still cover court costs and a final judgment.
Business owner insurance
This type of insurance is a combination of general liability and business property insurance. The type of insurance should provide balanced coverage in one policy. Some examples include:
- Insurance for fire and business interruption
- Loss of electronic data
- Damage to or theft of leased or non-owned vehicle
- Commercial crime insurance to cover dishonest employees who, for instance, are caught embezzling from your business
Life insurance for business partners
This type of insurance protects the company in the event of a partner’s death. The policy is structured so that the business is named the beneficiary and proceeds of the policy are then used by the business to help offset the loss of income resulting from the partner’s death and may be used to purchase the decedent’s share of the business.
In addition to acquiring such a policy, it is also recommended that your business have a business succession agreement in place now to detail what happens in the event the business receive proceeds from the policy and how those proceeds may be used. A business succession agreement is a legal contract among partners that defines how a partner’s share of a business is handled on the event of death or a voluntary departure. The business attorneys at the San Luis Obispo Toews Law Group, Inc., can help create a business succession plan and agreement.
Workers Compensation Insurance
California law requires that employers carry adequate workers’ compensation insurance to cover all part-time, full-time, temporary, seasonal, and family members in the event of a workplace injury. Sole proprietors, corporate officers with 15-percent or more stock ownership in the corporation and some family member-employees might be excluded from being required to be covered by a policy. The attorneys at Toews Law Group, Inc. can help you determine who in your company must be covered by workers compensation insurance and when coverage is absolutely required.
Work with the experts
The San Luis Obispo business attorneys at Toews Law Group, Inc. are here to work with you to develop your business and make sure that you have the tools and information necessary to make an informed decision about what types of insurance policies are right for your business. Call the Toews Law Group, Inc. and make an appointment to discuss this matter with an experienced business attorney.