Business Owners Insurance Policies Provide Essential Financial Protection
NEW YORK, July 7, 2011 —If you own or manage a small- to medium-sized business and are looking for insurance, you may be confused about what you do and don't need to cover. The Insurance Information Institute’s (I.I.I.) just released video, Insurance for the Small-To Medium-Sized Business Owner, helps businesses wade through the complex decision process when selecting appropriate coverage.
Only small- to medium-sized businesses that meet certain criteria are eligible for a BOP. Factors insurers consider include the number of employees and size of the business (typically fewer than 100 employees and less than $5 million in gross annual sales) the required limits of liability, the type of business and the extent of offsite activity. Premiums for BOP policies are based on those factors plus business location, financial stability, building construction, security features and fire hazards.
1. Property Insurance
Property insurance compensates a business if the property used in the business is lost or damaged as the result of various types of common perils such as fire or theft. Property insurance covers not just a building or structure but also what insurers refer to as personal property, meaning office furnishings, inventory, raw materials, machinery, computers and other items vital to a business’s operations. Depending on the type of BOP policy, there may be coverage for equipment breakdown, removal of debris after a fire or other destructive event, as well as some types of water damage and other losses.
2. Business income (BI) INSURANCE
Also referred to as Business Interruption Insurance, BI compensates a business owner for income lost following a disaster. Disasters typically disrupt operations and may force a business to vacate its premises. BI also covers the extra expense that may be incurred if a business must operate out of a temporary location. BI will cover your loss of net income and continuation of normal operating expenses, including payroll, typically for up to 12 months as a result of an insured peril. This type of coverage is not sold as a stand-alone policy, but can be added on to the business’s property insurance. Some insurers may automatically include it in the policy, so check with your insurer.
3. business Liability Insurance
Business Liability insurance protects your small- to medium-sized business in the event of a lawsuit for personal injury or property damages. It will usually cover the damages from a lawsuit along with the legal costs. Liability insurance also protects you from claims such as libel, slander and false advertising – even if those claims are meritless. It pays for damages up to the policy limits as well as attorney’s fees and other legal defense expenses.It also pays the medical bills of any people injured by, or on the premises of, the business.
Insurance Information Institute, 110 William Street, New York, NY 10038, (212) 346-5500