A relatively generic business office is the primary or only premises for numerous types of small service businesses, including, for example, employment, travel, collection, insurance, advertising and other agencies as well as for brokerage and consulting firms.
Other service businesses—such as hair salons, Internet service providers or photographers—require a substantial amount of service-specific equipment to provide their service.
Both types of businesses have risks in common. For example, all are at risk of lawsuits claiming that they failed to provide a service as promised or expected.
For many types of service businesses, the most cost effective and efficient way to obtain property and liability coverage is with a Businessowners Policy (BOP) tailored to their specific industry. Although marketed under a number of different names, these policies will typically have provisions similar to the property insurance and liability insurance sections of the BOP.
If your business owns the building it occupies, the policy covers that property. If your business rents or leases its premises, the policy provides coverage for tenants' improvements and betterments. Improvements and betterments are fixtures, alterations, installations or additions that you have put into the space that cannot legally be removed from the landlord’s premises.
Your policy will probably include two coverages that can be critical to enabling your business to recover after a disaster: Business Income and Extra Expense Insurance (also known as Business Interruption Insurance). Business Interruption Insurance helps pay ongoing expenses while your business is unable to function after a loss and also helps make up for lost profits. Extra Expense Coverage helps you recover as quickly as possible by paying extra expenses caused by the loss—such as rent for temporary quarters.
The BOP includes as part of the basic policy two types of coverage related to electronic data. Computer Operations Interruption Coverage pays for business income lost and extra expenses incurred as a result of many computer problems. Electronic Data Loss Coverage pays the cost to replace or restore electronic data destroyed or damaged as the result of causes of loss named in the policy. These include a computer virus or harmful code. For more coverage, there are several endorsements you can choose to add. You should discuss your needs with your agent.
Coverage can easily be added to these policies for such items as special equipment, fine arts, valuable papers and records, and accounts receivable.
The more high-value merchandise on the business premises, the higher the possibility that it will be a target for theft. Robbery and Burglary Insurance may be needed as well as Employee Dishonesty Insurance to protect against theft by insiders. You can add these coverages to your package policy.
If you provide any type of advice, expertise or professional service you risk being sued by a customer, client or other third party who claims he or she was injured due to your negligent act, error or omission. Professional Liability Insurance, also called Malpractice Insurance, and Errors and Omissions Liability Insurance, pays the cost of your defense and any damages awarded, up to policy limits. Insurance companies have developed many specialized policy forms that respond to the individual risks characteristic of particular businesses.
You also need coverage for other potential liability risks you have in common with many other types of enterprises, such as a slip and fall accident or a libel or slander claim. Click here for information about the protections typically provided by liability insurance and about coverages that you may wish to add.
BUSINESS VEHICLE INSURANCE
Your personal auto policy probably provides coverage for some business use of your vehicle. A personal auto policy is unlikely to provide coverage, however, if the vehicle in question is used primarily in business. It will not provide coverage for any vehicle owned by a business. For those vehicles you must have a business auto policy.
Should you be driving your personal auto for a business purpose and get into an accident for which you are liable, an injured person could sue you personally. Will your personal auto policy have enough coverage to pay all the damages? If not, a lawsuit may be filed against your business. If you or your employees use personal vehicles for business, you want to be sure you have high enough limits to protect your business. You should discuss this with your insurance agent.
WORKERS COMPENSATION INSURANCE
States have varying rules about when an employer must provide workers compensation insurance. If you have three or more employees, you should check with your state department of workers compensation to see if you are required to provide workers comp insurance.