DID YOU KNOW?

Earthquakes and floods...

may not be covered in your general business liability insurance policy. Be sure to check with your Henry O. Baker representative - and be covered if disaster strikes.

FAQ: Business

Q: I'm just getting my business started. Do I need insurance right away?

Yes, because the chance that you could suffer a loss begins with the first day of business. You can't get help after the fact. If you suffer a loss and have no insurance or have improper or insufficient coverage, there is very little, if anything, your Henry O. Baker agent can do to help you. You must be prepared for the risks that are inherent in any business and the losses, sometimes catastrophic, that they can cause.

Also, many states and local jurisdictions require that businesses be insured to begin operating. And if you rent space for your business, your landlord probably requires that you be adequately insured as well.

Q: What should I look for in an agent?

Agents are there to help you. At the most basic level, any agent should be able to answer your questions about insurance, help you thoroughly assess your insurance needs and offer you insurance products to help meet those needs. Also, any insurance agency should provide you with prompt, quality service in the case of a claim.

Just as important is the level of professional confidence and personal comfort you feel with the agent. Many people stick with the same insurance agent for decades, even generations. It helps to find an agent you can get to know and trust.

An important, but sometimes overlooked factor to keep in mind is that there are two kinds of insurance agents: those who represent only one insurance company and those who represent more than one insurance company.

Agents offering through their agencies only the policies of one insurance company often are referred to as "captive agents," because the company they represent does not allow them to offer their customers competitive alternatives.

By contrast, agents offering through their agencies the policies of more than one insurance company are called "independent agents," because they can shop around for their customers for the best insurance values among a variety of competing companies. A nationwide survey showed that Americans prefer to work with independent insurance agents by a 2-to-1 margin over captive agents.

Q: I don't have any major business assets. Why do I need insurance?

Every business has some property. And, when you think about it, your business is your property. Just like your home and your car, your business needs to be protected from loss, damage and liability. In addition, your business is your source of income, so you need protection from the potential loss of that income.

Generally, there are two types of insurance -- property and liability. Property insurance covers damage to or loss of the policyholder's property. And if somebody sued for damages caused by you or your possessions (other than a vehicle covered by your insurance policy), the cost of the suit -- both defending it and settling it, if necessary -- would be covered by your liability insurance.

Q: Is insurance coverage different for different businesses?

It can be. Many small businesses are now insured under package policies that cover the major property and liability exposures as well as loss of income. A common package policy used by many small businesses is called the Businessowners Policy (BOP).

Generally, these package policies provide the small business owner more complete coverage at a lower price than separate policies for each type of insurance needed. Your Henry O. Baker agent can help you decide which policy or policies are right for your business. Additional coverage for property, liability or perils or conditions otherwise excluded (e.g., flood protection) can be purchased as endorsements to a standard policy or as a separate, second policy called a difference-in-conditions (DIC) policy.

Because businesses vary, it is impossible to have a standard policy to cover all contingencies. Also, some businesses, regardless of their size, do not fit the profile of a standard business owners policy. For example, restaurants, wholesalers and garages have special liability needs that are not met in the standard business owners policy. Your Henry O. Baker agent can provide you with information so you can choose the right policy (or policies) to protect you and your business.

Q: What types of property do I need to insure?

Your business may not possess all the following types of property, but you can use this list to make sure that you have considered all the property categories and any insurance coverage that may be warranted:

  • Buildings and other structures (owned or leased)
  • Furniture, equipment and supplies
  • Inventory
  • Money and securities
  • Records of accounts receivable
  • Improvements and betterments you made to the premises
  • Machinery
  • Boilers
  • Data processing equipment and media (including computers)
  • Valuable papers, books and documents
  • Mobile property such as automobiles, trucks and construction equipment
  • Satellite dishes
  • Signs, fences, and other outdoor property not attached to a building
  • Intangible property (good will, trademarks, etc.)
  • Leased equipment

To establish the amount of insurance you need on each, your Henry O. Baker agent can help you review the types of property you own and their uses. Some of these items are covered in the basic policies. For others, coverage can be added by an endorsement, or rider. And some, like money and securities, may not be covered by a standard commercial policy and may require a second, separate policy.

Q: What kinds of events does business insurance cover?

Basic property insurance policies generally cover losses caused by fire or lightning and the cost of removing property to protect it from further damage (e.g., removing inventory or equipment from a damaged building so it won't be stolen). "Extended perils," including windstorm, hail, explosion, riot and civil commotion, and damage caused by aircraft, automobiles or vandalism, are usually covered in a standard policy. Other important perils, often not covered and considered "optional" in almost all standard policies, include earthquake and flood damage, building collapse, and glass breakage.

Property insurance can be written as either "named peril" policies or so-called "all risk" policies. A named peril policy provides coverage for those perils specifically named in the policy. An all risk policy covers loss by any perils not specifically excluded in the policy. The term "all risk" does not mean that all perils will be covered and, to avoid confusion, is often replaced with the term "special form" or "special causes of loss" coverage.

Check with your Henry O. Baker agent on the perils covered by your policy. If you wish, additional coverage can be added.

Q: What about the cars and truck that I have in my business? Is the coverage like what I have on my personal car?

Yes, but in addition to covering the vehicles you own for liability, medical payments, uninsured motorist coverage, comprehensive and collision, it also covers you when you rent a car and when your employees are operating your company vehicles. Be sure to review your auto exposures with your Henry O. Baker agent.

Q: Will I need to protect my employees in the event they are injured on the job?

Yes, and in most states there are legal requirements that must be met, and for which you may be responsible. State laws vary, but most states require that you carry some form of workers compensation insurance.

Q: I just signed a 3-year lease to open my business. Why does my insurance agent want to see my lease?

Whether the business lease is for a building or for equipment, your Henry O. Baker agent needs to determine who is responsible for insuring the leased items--you or the lessor. For leased buildings or building space, there are other factors to be considered, such as who is responsible for plate glass coverage and whether your landlord requires tenants to carry minimum amounts of liability insurance, and the extent of a hold harmless agreement. These and other situations covered in the lease affect the amount and kinds of insurance you need.

Q: I work out of my home. Will my homeowners insurance cover my business?

Yes, but on a very limited basis. Loss of business property is usually reimbursed (up to a certain amount) for a house and for business property damaged or lost away from the premises. Even if your business is a sideline such as a craft studio, these limits may be too low to cover all the equipment and materials you have accumulated. It's also important to know that no business liability coverage is included in a standard homeowners policy. Your Henry O. Baker agent can help you ascertain what, if any, additional coverage you need. This additional coverage may be added to your homeowners policy or found in a separate commercial policy.

Q: As a retailer, do I need to worry about product liability?

As long as you do not alter the products you receive from manufacturers for resale, you have only a secondary liability. The product manufacturer is the first liable party. General liability insurance usually covers this secondary liability, but you should check with your Henry O. Baker agent so that he or she can help you ensure your business is adequately covered. Recognize, too, that your liability policy will pay defense costs, whether or not a judgment is rendered against you.

Q: Now that my business is established, I think it is time to offer my employees some benefits. What do I need to know?
 

Employee benefits generally include health insurance (sometimes including dental and vision benefits), term life insurance, and possibly a retirement program. Group disability insurance is also available, although employers and employees opt for this benefit less frequently.

Employers can provide coverage for their employees alone or for the employees and their families. Cost is usually the determining factor. With the high cost of health insurance in the United States today, employers are more likely to ask employees to pay some or all of the costs of health insurance for their families and sometimes for the employees themselves.

Small businesses can also sometimes obtain employee benefit insurance through their trade or professional association. Your best bet as a small business operator is to find a way to join a larger pool seeking benefits. Check with your Henry O. Baker agent on the options available to you.

Q: Who keeps an eye on the insurance companies?

Insurance is a heavily regulated industry. Every state has a department that regulates and monitors every insurer operating within the state’s borders. In addition to approving rates, your state's insurance department is involved in all insurance matters on behalf of private citizens and businesses. It also issues operating licenses to insurers and agents, based on their ability to meet the state's requirements for conduct and knowledge about insurance issues.

Your insurance company and Henry O. Baker agent work together to provide you with prompt, quality service in the case of a claim. If you ever have difficulty resolving a claim, you should speak with your Henry O. Baker agent. However, you can also contact your state's insurance department if you wish to know more about your options and rights as an insurance consumer.


 

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