Business Insurance 101: the basics

We are entrepreneurs.

We support entrepreneurship by helping your business SHINE.

We created Business Insurance 101 to help you understand basics.

In our experience, businesses usually need…

General Liability: Coverage to protect your business if someone gets hurt and you get sued

Typical reasons you’ll be glad you have General Liability coverage:

  1. Your landlord requires it
  2. Your vendors require it
  3. Your suppliers require it
  4. Customer slips and falls in your biz space, on the sidewalk or in the parking lot
  5. Customer gets sick because of your product (even if it wasn’t your fault)
  6. You talk smack about someone else or their business
  7. Your legal advisor tells you that you need it
  8. Common coverage amount – $1,000,000
  9. Cost is primarily based on gross revenue estimates for the next 12 months, payroll, or square footage depending on the type of business
  10. Really good optional add-ons
    1. Hired & Non Owned Auto (if you do not have a Commercial Auto policy, put this coverage on your General Liability) 
    2. EPLI – Employment Practices Liability Insurance protects your biz when someone accuses you of failure to hire, wrongful termination, discrimination, harassment…even if you did nothing wrong.  If you don’t have it you’ll have to defend yourself, so buy this and let the insurance company defend you instead

Professional Liability: pays to defend your business and pays damages to injured/harmed person who claims their harm was your fault and you should have known better because you’re a professional

Property: Coverage to replace your stuff if you suffer fire, tornado, theft, vandalism, and more

Typical things that businesses insure:

  1. Business property – building, furniture, inventory, stock
  2. Business income – money you’d expect to make if you hadn’t suffered a loss
  3. Extra expense – the extra cost you’re stuck with when you have to move because of a loss
  4. Inland Marine – tools & equipment that travels away from your business location
  5. Cost is based on cost to replace the property, deductible, location and security measures

Workers Compensation: pays medical bills and wages when your employee is injured on the job

  1. Indiana requires all employers to provide Work Comp coverage for people working under their direction, including many independent contractors.
  2. Sole proprietors may elect coverage for themselves on the Work Comp policy
  3. Members of an LLC and Officers of a Corporation have to be included for coverage, and the state sets the payroll amount to be used – even if no payroll is taken
  4. Cost is based on payroll, type of work, experience, and number of employees
  5. Companies have different ways of charging, so you may receive different quotes from different companies
  6. Indiana state minimum limits:

Bodily Injury by Accident  $100,000 each accident

Bodily Injury by Disease   $100,000 each employee

Bodily Injury by Disease   $500,000 altogether

Commercial Auto: coverage for your vehicle if you deliver goods, transport people, or the vehicle is titled or leased to the business

Typical commercial auto coverage:

  1. Bodily injury to others
    1. most common coverage amount is $1,000,000 CSL
    2. pays for legal defense and damages if you or your employee are legally responsible for an accident injuring someone other than your passengers
    3. Collision – pays for repair/replacement of your vehicle when you have to deal with a wreck involving another vehicle or a stationary object like a stop sign
    4. Comprehensive – pays for repair/replacement of your vehicle in the event of damage resulting from things like vandalism, theft, fire, tree limb or running into a deer
    5. Hired Auto – pays for legal defense and damages if you or your employee has an accident in a rented vehicle
    6. Non Owned Auto – same as Hired Auto except it applies to your employee driving their own vehicle instead of a rented vehicle
    7. Cost is based on driving records (accidents and tickets), age, vehicle type, and coverage selected

This is a brief overview of the coverage that most businesses need and is not meant to be a comprehensive description of exactly what your business needs.  Your trusted agent will help you with that.

Top 2 tips beyond the coverage:

  1. Do NOT shop by price alone. Business owners who focus purely on price often find the worst service and catastrophic claims experiences.
  2. Trust your gut and find an agent with integrity.  Your insurance agent is one of the key financial and risk advisers on your business team, choose this relationship wisely.

Let us know how we can help. Click to email McKenzie. Fill out the form and your message will go directly to her email.

Do your friends a favor and share this.