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Business Insurance

Business Owners Policy

Business Owner’s Policy (BOP) is a business insurance package which contains all the major liability, property risks, and business interruption coverage. BOP covers the business in the occurrence of such things as property damage, suspended operations, or lawsuits resulting from bodily injury or property damage to others. BOP is recommended for most small to medium size business because it offers broad coverages and has lower premium than purchase each coverage individually.

What’s Covered?

Usually a BOP policy included the following coverages:

  • General liability (for the premises and operations)
  • Product/Service liability
  • Business income or business interruption and extra expense (loss of revenue and incur extra expenses like rent, payroll due to insured loss)
  • Business personal property based on the property’s actual cash value (loss of stock, equipments, etc due to insured loss.)
  • Building coverage (optional for some businesses)
  • Crime (Burglary, robbery, theft, forgery, employee dishonesty)
  • Equipment breakdown coverage (for the machinery, boiler, optional for some business)
  • Hired and non owned auto (optional for some businesses) – Vehicle coverage for rented or borrowed vehicles.

 

What Isn’t Covered?

Usually a BOP doesn’t cover the following:

  • Damage due to earthquakes or floods
  • Workers’ compensation
  • Group health
  • Life or disability insurance
  • Company-owned vehicles
  • Specialized liability risks such as professional liability, director’s and officers, employment practices and malpractice.

 

What Affects the Cost of the Policy?

The premium is based on a variety of factors, depending on the types of coverage forms included in the policy. The size of the insured’s operations, the inherent risk of the products, annual gross revenue, business personal properties limit, business risk management, building age, size, construction material, business claim history, location of business will affect the premium.

General Liability

Commercial General Liability (GL) coverage can be obtained as a stand-alone policy or as part of a Business Owners Policy (BOP) or a Commercial Package Policy. The basic areas covered by a General Liability policy are premises liability, Products and Completed Operations Liability, Personal and Advertising Injury, Fire Legal Liability and Medical Expenses.

What’s Covered?

A GL policy pays for bodily injury and property damages that the insured is legally obligated to pay. Liability insurance covers the business if it is sued for something the business did or failed to do that caused injury or property damage to someone else. Liability insurance covers damages and settlements stemming from a lawsuit, up to the policy limits. General Liability policies also cover attorneys’ fees and other costs associated with defending against a lawsuit.
GL policies generally cover the insured’s ownership or use of the premises, operations, contractual agreements, products made, sold or distributed, completed operations, personal and advertising injury and medical payments. Medical Payments cover reasonable medical expenses due to bodily injury, regardless of fault.

What Isn’t Covered?

GL policy does not cover workers’ compensation, business interruption and extra expenses, professional liability, aircraft liability, automobile liability, watercraft liability, product recall, employment practice liability, director and officer, pollution, Liquor Liability.

What Affects the Cost of the Policy?
The premium is based on a variety of factors, depending on the types of coverage forms included in the policy. The size of the insured’s operations and the inherent risk of the products will affect the premium.

Workers’ Compensation

Workers compensation (WC) insurance covers the employee(s) injured on the job, whether they’re hurt on the workplace premises or elsewhere, or in auto accidents while on business, or work-related illnesses. Workers’ comp insurance provides six basic benefits:

  • Medical care,
  • Temporary disability benefits
  • Permanent disability benefits
  • Supplemental job displacement benefits
  • Vocational rehabilitation
  • Death benefits

 

Who Needs Workers’ Compensation?

California requires employer/company to carry WC insurance if the employer/company has any employee – part time or full time. If the Division of Labor Standards Enforcement (state labor commissioner) determines an employer is operating without workers’ compensation coverage, a stop order will be issued. This order prohibits the use of employee labor until coverage is obtained, and failure to observe it is a misdemeanor punishable by imprisonment in the county jail for up to 60 days, or by a fine of up to $10,000, or both. The Division of Labor Standards Enforcement will also assess a penalty of $1,000 per employee on the payroll at the time the stop order is issued and served, up to $100,000 (Labor Code section 3722(a)). For more WC FAQs visit the CA Department of Industrial Relations URL below:

http://www.dir.ca.gov/DWC/faqs.html

If you have employee(s) outside of CA, you want to get the WC insurance from an insurance company that offer nation coverage (except North Dakota, Washington, Wyoming and Ohio which you must obtain the policy from the state).

What Affects the Cost of the Policy?

WC policy is affected by (a) company’s payroll – The higher your payroll, the higher your premium will be. (b) The kind of work or classification your employees – higher injury risk, higher rate. For example, clerical employees have less chance of injury compare to employees who work on construction site. The WC premium is based on this formula

Total annual gross payroll of each classification/100 X classification rate

For example, the annual gross payroll for clerical employees is $200,000 and rate is 1.2 per $100, then the premium is $200,000/$100 x 1.2 = $2,400.

WC premium is always an estimated premium when quoted. The actual WC premium will be determined after the payroll audit conducted after the renewal or termination. If there is any differences between estimated premium and actual premium, the WC premium is then adjusted accordingly. The insured will either get a refund or asks to pay the premium difference.

Commercial Automobile Insurance

Commercial auto insurance provides bodily injury, property damage coverage, and medical expenses for company-owned vehicles in the event of an accident. Company owned vehicles can be cars, trucks, buses and other types of vehicles. A common endorsement to commercial auto policy is non-owned and hired auto liability insurance. This endorsement covers vehicles your employees use or rent or borrow but the business doesn’t own.

What’s Covered?

Commercial auto insurance has following coverage:

  • Bodily injury liability coverage – if you caused the acident, it pays for bodily injury or death resulting from an accident, and provides you with a legal defense.
  • Property damage liability coverage – if you caused the accident, it pays for the another persons property damage. It also provides you with a legal defense.
  • Medical payments, no-fault or personal injury coverage – usually pays for the medical expenses of the driver and passengers in your vehicle incurred as a result of a covered accident regardless of fault.
  • Uninsured motorist coverage – If an uninsured motorist or hit-and-run caused bodily injury and/or property damage, it pays for your injuries and property damage.
  • Comprehensive physical damage coverage – cover physical damage to your vehicle from theft, vandalism, flood, fire, and other covered perils.
  • Collision coverage – cover damage to your vehicle when it hits or is hit by another object.

 

What Affects the Cost of the Policy?

The key factors that affects the policy premium are (a) type of vehicles insured, (b) the location of the business, ( c) driver experience, age and driving record, (d) average driving radius.

Professional Liability

Professiona Liability Insurance (PLI) also known as Errors & Omissions (E&O) or Malpractice Insurance (MI) depends on what type of professional services you provide. PLI helps protect professional advice and service-providing individuals and companies from bearing the full cost of defending claim arising out of professional’s errors, negligent acts, or omission made by a client, and damages awarded in such a civil lawsuit. PLI is sometimes required under contract by other businesses or your clients. Most PLI are based on a claims-made basis which means the policy only covers claims that reported during the policy period. There is no coverage once you terminate the policy. For a professional who is going to retire from the professional field it is highly recommend to get the Extended Reporting Policy to extend the coverage beyond the expiration of the policy. The duration of the extension depends on current policy.Who Needs It?
Anyone or company who provides professional advice and/or tasks. Below are some of the sample list of those who needs it:

  • Information Technology Professionals
  • Healthcare Professionals
  • Architects and Engineers Professionals
  • Accounting and Financial Professionals
  • Insurance Professionals
  • Legal Professionals
  • Real Estate Professionals
  • Education Professionals.

 

What Affects the Cost of the Policy?

The key factors that affects the policy premium are (a) type of profession, (b) experience in the profession, and ( c) claim history.

 

Employment Practice Liability Insurance

Employment Practices Liability Insurance (EPLI) provides insurance coverage for claims arised with following allegations from either current or ex employee(s):

  • Age discrimination.
  • Race discrimination.
  • Sex discrimination.
  • Sexual harassment.
  • “Failure to promote” and “opportunity denial” allegations.
  • Hostile work environment.
  • Wrongful discharge.

 

What Affects the Cost of the Policy?

The key factors that affects the policy premium are (a) type of business, (b) any recent layoff or plan to layoff employee(s), ( c) total number of employees, and (d) claim history.