Business Insurance - A full Overview.

Hey, this is Jeremy from Shine Insurance and our blog today is really the Business Insurance Overview, the four basic parts of insurance. 

Business Insurance - A full Overview.

This blog is for you if you are either new to owning a business and just kinda wanna understand how insurance works, or you've owned a business for a long time and you've never really paid too much attention to your insurance policy and you want to understand it now. 

I'm gonna go very quickly through coverages and provide you with a form that you can download that really is gonna organize your insurance world no matter where you get your insurance from. 

So let's dig right into it. What we're gonna learn is the four basic parts. The first is what's called Liability Coverage, the second is Property Coverage, the third is Workers' Compensation coverage, sometimes called Work Comp, and  the third is Commercial Auto insurance. 

So we're gonna break those four things down for you very quickly. I wanna show you the coverage details form that I really think you should download and have in front of you while watching this blog. 

I would stop this blog right now and download both options. The first one is a blank form. So it has all the coverages I'm gonna talk about but it doesn't have any of  the limits in it so that you can fill them in yourself. And then the next one has some example limits. So I've filled it in with something that I might provide or offer to a client. 

So you can see some common coverage limits and examples of what those different coverages might look like so you can compare them to your own policy and get a sense of kinda what it should look like. So the blank one I would download. And then the example one I would download. The blank one obviously is for you to complete. And the example one is one that I've put sample coverage limits in there so you can see what your coverages might look like. 

The rest of this blog is going to go through these line by line and just say what they are. You can have that in front of you and understand each line so you know what's going on there. 

Liability Coverage.

So let's dig right into it. We're starting with Liability Coverage. What Liability Coverage is coverage for bad things that happen to other people because of you, or more specifically in this blog, because of your business. 

Bad things that happen to other people because of you. That could be coverage for medical bills or lawsuits associated with injuries to patrons at your place of business. This is the trip-and-fall or someone had something bad physically happen, they slipped or anything like that. General Liability coverage is gonna be what you have for those types of coverages. 

A common limit for these is a million dollars per occurrence, and two million dollars per year. Oftentimes it's separated out by how much your insurance company would pay out in any given occurrence. One bad thing that happened in this example it's a million dollars. And then the most your insurance company would pay out period for the whole year. 

So if they got to that two-million-dollar limit, then they would not pay out no matter what other bad things happened at your place of business. So that's a common limit. What is General Liability not? Well, it's not for sickness or injuries caused by your product or finished operation. It's not for bad advice that you give to people. And it's not for injuries to your employees. We'll cover where those coverages come 

from as we move along. But General Liability is not for either of those three things. Medical Expenses is the next thing. It's a small and super accessible coverage for injuries to business patrons. It's very much like General Liability, but it's a tinier amount, usually five or $10,000. And it's very easy to access. Where General Liability coverage sometimes can be, after all the medical bills are paid out or 

even through a lawsuit process, Medical Expenses is much more quick. It's much more quickly accessed. Essentially it's there to avoid a bigger liability situation. So Medical Expenses is an important coverage. Products Liability. This is where coverage for sickness or injury from your finished products or your completed operations comes from. Especially if you're a food provider or a food manufacturer 

or something like that, Products Liability is super important to you and this is where it comes in. Employment Practices Liability. This is coverage for lawsuits associated with your hiring practices, with your firing practices, with your workplace behavior practices. If something bad happened and someone decides to sue you because of any of those things, then you could have Employment Practices 

Liability coverage, an incredibly important coverage to have on your business insurance policy. Hope I'm not moving too fast here. Employee Benefits Liability. Not a commonly known coverage but super 

important. You provide benefits to your employees, oftentimes health benefits, or life benefits or things of that nature. If for some reason the benefits package didn't come through in a situation where someone needed it, you do have liability coverage for that if you have Employee Benefits Liability. Cyber liability, becoming much more important for businesses. It's a package of coverage options 

associated with a cyber breach of your patrons' personal information, especially if you collect social security numbers, visa card information, even birthdays and things of that nature. If you have any of that kind of information, it could be breached, and Cyber Liability is incredibly important a coverage for you to have there. And then Professional Liability coverage is coverage for lawsuits resulting from 

errors, omissions, or bad advice provided by your business. So if you're a financial advisor, an insurance agent, these are coverages that you need for sure. But lots of different types of businesses need this coverage because you provide advice, all different kinds of advice has coverage here. And Professional Liability is where you find that coverage. Again, not General Liability but Professional 

Liability. Finally on the liability coverage, Hired and Non-Owned Auto. Oftentimes this is just thrown in as a part of the package. But it's super important. It's coverage for auto liability associated with your business in vehicles not owned by your business. So if someone uses their own car to run an errand and is clearly doing business work, but gets in an accident during that time, your Hired and Non-Owned 

Auto policy may be what comes into play as a part of the coverage needed in that situation. So Hired and Non-Owned Auto coverage is the final liability coverage. 

Property Coverage.

Alright, let's move on to Property Coverage. Property Coverage is very simply coverage for damage to the physical assets of you business. This could be a lot of different physical assets that your business owns. Property Coverage is what covers them. 

So let's check it out. We start with Building Coverage. Building Coverage is simply coverage for damage to the building itself. If you own your building, or if you have a lease that's like a triple net net lease where you're responsible for insuring your building even if you don't own it, then the Building Coverage on your policy is incredibly important. 

The next one is Business Personal Property, sometimes referred to as BPP, coverage for damage to the equipment, furniture, and belongings owned by the business. So this is kinda like everything else, the stuff you own inside of your structure, you have office furniture, you may have equipment specific to the business that you run, all those kinds of things are covered by Business Personal Property coverage. 

That's an important coverage on your policy. And it can be set up based on a payout of either Replacement Cost or ACV, we won't dig deep into these details, but Replacement Cost is definitely what you want, and not ACV. Another property coverage is Data Compromise. This is connected with Cyber Liability. Oftentimes the package, Cyber Liability and Data Compromise are together. 

But this case is if your hardware or your software is damaged or lost in a cyber attack, so you have physical assets that are ruined, or need to be replaced, need to be re-downloaded, need to be re-put together, and Data Compromise coverage can help. Specialized Equipment Coverage, also called Inland Marine coverage, is coverage set up for incredibly valuable, or specialized, or hard to replace business equipment, particularly if you have vintage equipment, or things that are just very, very specialized for your business. 

You wanna make sure that they're on your policy specifically and the coverage is set up properly. An insurance agent can help you with that. Money and Securities, coverage for the loss of physical assets like money or securities. Business Income Coverage, super important, coverage for lost income because of a covered business shut down. 

So something bad happened, your business can't run for that month or whatever it is, you've lost income associated with people coming in your front door and doing business with you. Your insurance policy can actually cover some of that lost income if you have Business Income Coverage. Employee Dishonesty is coverage for assets stolen by an employee. 

That happens more than we wanna think about but it certainly happens. And Forgery and Alteration, very much similar to the previous one, is coverage for assets improperly manipulated by an employee. Finally on property coverage, we have Equipment Breakdown. This is a great coverage to have, coverage for temporary and permanent replacement of equipment that fails unexpectedly. 

There's lots of examples where a heating or air conditioning unit stops working, and a business needs to keep running. And a lot of these policies will actually cover a temporary replacement so that you can get your business back running, and make sure that you don't lose income associated with your business being closed, and then can help with the replacement of the actual item too. 

Now it's important to note if your heating and air conditioning just got old, this is not a coverage that would take care of that. That's more like a maintenance issue, something you need to update on your own. So that's Equipment Breakdown Coverage. 

Workers' Compensation.

Alright, let's dig into Work Compensation. Workers' Compensation, sometimes called Workers' Comp or Work Comp, simply means coverage for injuries to your own employees, coverage for injuries to your employees. 

Now there's a coverage limit that's generally set up for three separate numbers, so 100, 500, 100 as an example. So let's break down what those numbers mean. A lot of times that's confusing. And the first number is the policy limit. The most an insurance company will pay out for physical injuries to your employees while they're working. Pretty simple, right? 

The second is the policy limit for sickness caused by the workplace. And that's for the whole claim. So the second one is for the whole claim, the policy limit for sickness caused by the workplace. The third is the per person limit for sickness caused by the workplace. So you're gonna have a limit per person, and then a total limit for the entire claim caused by sickness. 

Those are two different numbers. So let's look at the example of $100,000, $500,000, and $100,000, see what that means. The first number, 100, is what the insurance company would pay per physical injury. They would pay no more than $100,000 per physical injury. Obviously if it was less than $100,000, that's what we would pay. We would pay up to $100,000. They would pay no more than $500,000 total per sickness caused by the workplace, or $100,000 per person 

for sickness caused by the workplace. So that would be a 100, 500, 100 situation, and that would be the coverage limits that you would have there. The Premium is paid in kind of a weird way with Workers' Compensation and businesses get confused by this all the time. What you pay for this coverage is based on two things, the type of work your employees do, which is like your employee category, and your 

actual annual payroll, how much you pay out in payroll. The thing is that you don't know at the beginning of the policy term exactly what you're gonna pay out in payroll. So you make an estimate. So we make an estimate with you of what you think you're gonna pay in payroll, and what jobs do you think people are gonna do at the beginning of the term, and we set a Premium based on that. But at the 

end the company is gonna come back and they're gonna audit your payroll, and they're gonna see what the actual numbers were. And that's were people get really confused and sometimes really frustrated. If you overpaid, if you paid for more payroll or different jobs than actually happened, then the company will actually send you a refund check. But if you underpaid, if you underestimated your payroll, or if 

you said someone was clerical when they were actually up on the roofs doing risky things, then the insurance company is actually gonna send you a bill, and that's after the fact. So you could get a bill and it's for the previous year's workers' compensation because of the audit. So that can be very confusing. I have another video out there that describes that even more but just want to lay it out a little bit here.

Commercial Auto.

Alright, last part is Commercial Auto. Pretty straightforward.This is coverage for vehicles owned by your business. Vehicles are covered, your fleet of vehicles, it could be one vehicle, it could be a hundred vehicles, it could be a car, it could be trucks, it could be all different kinds of vehicle but obviously we're gonna cover just the fleet of vehicles that your business actually owns.

There's two parts of this. The first is Auto Liability. This is damage and injuries to others by your vehicle. So you got an accident, the accident was your fault, another car was smashed, other people were injured, that's where your Commercial Auto Liability coverage is gonna come into. And then Physical Damage Coverage. 

This is simply for damage done to your own vehicle. It usually has deductibles associated with it for comprehensive and collusion, two different kinds of physical damage that can happen to your vehicles. Commercial Auto is very state-based. So you really wanna make sure you understand how auto insurance works in your state. 

Your insurance agent should be explaining to you based on the state laws that you experience. Okay, that was it. you'll use it to compare to your current insurance policy, or talk to your insurance agent about it. If you have questions about any of those specific coverages, you can go back into this blog and find my very quick explanation of that particular thing. 

And then we've got the other one that has coverage examples as well. Okay, what did we learn? What did we talk about? Four different types of business coverage. 

We talked about Liability Coverage. There's lots of different liability coverages in your business policy. We talked about Property Coverage, coverage for your physical assets. Workers' Compensation coverage, coverage for injuries to your employees. And finally Commercial Auto coverage, coverage for your fleet of vehicles and damage that they could do to other people, as well as damage that could happen to them themselves. 

I already mentioned it but our Worker's Comp Audit,you can click right here and get access to that blog. We described in detail how paying for your Worker's Comp policy works.   

Good information is only great if it's shared with others. Alright, this is Jeremyfrom Shine Insurance. And until the next time, have a wonderful day.