Business Insurance FAQs

My business is very small. Do I really need insurance?

A: Any business should consider insurance. In general, smaller businesses have the greatest need for insurance because they are often less equipped to deal with a significant loss than a mid to large size business because they have fewer assets at their disposal to help recover. It is also important to consider that if you have a small, home-based business your homeowners policy likely provides little to no protection. Finally, even if your business has few assets to protect, you may have a very large risk from a lawsuit or liability claim, Liability insurance is very important for any business.

What coverage should I look at for my business?

A: Every business has unique risks but in general, you will want to cover the physical assets your business owns, liability from business operations, and any business auto exposure. Many businesses will have a risk of theft of money or embezzlement which can be covered on a business policy. Most businesses will need some coverage for their lost income after a claim that keeps them from operating as normal. There are may other options as well such as coverage for property of others in your care, property in transit, professional liability, and more. A Sullivan Insurance agent can visit your business and help you analyze what risks you face.

What is Business Interruption Insurance?

A: Business Interruption Insurance (or Business Income Coverage) can be purchased to help your business recoup the income that is lost after a claim. For instance, a restaurant that experiences a fire may have plenty of insurance to rebuild their building but if they do not have business interruption coverage, they will have no income coming in over the months it takes to rebuild and may not be able to meet ongoing expenses such as taxes, mortgage, utilities, etc. A similar coverage that often comes alongside business income protection is Extra Expense coverage, which pays for unusual or extra expenses that come along with a loss. Such expenses might include expediting fees to get replacement equipment onsite quickly, or lease fees associated with procuring a temporary replacement space for your business.

What is Inland Marine Coverage?

A: This is a coverage that follows property anywhere in the U.S. Unlike a property form, where one limit of insurance is listed that covers all property at the specified location, items covered on an inland marine form usually (but not always) must be listed individually. Coverage under the inland marine form is usually provided on an actual cash value basis. For small items like contractors tools we can offer a blanket limit. The inland Marine form is extremely flexible and can be used to cover everything from musical instruments, to cargo, to tools, to building materials before they are installed. An inland marine declaration will show the scheduled items, deductible, coinsurance (often 100%), and other major provisions.

What is General Liability Insurance?

A: General Liability Coverage (Sometimes referred to as “GL” or “CGL”) is a policy form that covers bodily injury and property damage for which the insured is responsible. Professional exposures, like work done by doctors or architects, are excluded as are issues of warranty or guarantee of work.
The coverage declarations will usually show separate limits for each occurrence vs. one aggregate limit. The per-occurrence limit generally applies per claim. The aggregate is the most that will be paid per year (or in some cases for contractors, per project). Personal injury coverage is often provided as well, which covers things like slander, false imprisonment, and libel. Products and Completed Operations covers is another common inclusion and covers bodily injury and property damage arising from the insureds products sold, or work performed. Fire legal liability coverage may be shown and pays for fire damage to a building that may be rented to an insured in a short-term basis. Medical Payments coverage, if provided, is similar to the Medical Payments coverage found in a homeowners policy in that it may be applied at the insured’s request whether the insured is legally liable for the injury or not.

General Liability policies are usually rated based upon sales (for service, manufacturing, or retail type businesses), payroll (for contractors), or square foot (for offices). Occasionally other methods of rating are used. Many endorsements to the GL policy are available.

What is a Certificate of Insurance?

A: Many parties may request a certificate of insurance from a policyholder. This is a document produced by the agent that tells the requester that the business in question is insured. The certificate holder/requester is named at the bottom of the certificate. Certificate holders may also request that they be named “additional insured” which provides additional protections for them.

What is an “Additional Insured?”

A: This endorsement allows a third party to have access to the policyholder’s liability limits in certain situations (usually in a case where the policyholder is being sued and the additional insured is being brought into the suit because of their relationship to the policyholder). There are many different types of additional insured endorsements available to handle various types of business relationships.