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Insuring Your Business: Annual Reviews Are Necessary to Ensure Proper Coverage

What happens if a customer hurts himself at your business?  What happens if there is a fire at the plant?  What happens if your product has problems? Business owners should be asking these types of questions on a regular basis, and should review their potential exposure to risk often. There are liability insurance policies that are available to protect businesses from most issues. The following are some important liability insurance options which you should consider for your business:

Commercial Liability Insurance

Typically, commercial liability policies consist of several different types of liability insurance coverage, most commonly general liability coverage, equipment protection coverage and income protection coverage.  General liability coverage protects the business where there is an injury or property damage that occurs on the site of the business, such as slip-and-fall accidents.

Workers’ Compensation Insurance

Workers’ compensation insurance protects the business in the event an employee is injured on the job. This insurance is mandated by California state law. Not only can the costs of treating an injured worker be steep, but the penalties for failure to carry workers’ compensation insurance are substantial.  There are certain exceptions to who is required to be covered. Legal counsel should be sought before making that determination.

Product Liability Insurance

When a business produces a product of any kind, from computer parts to toys, that business should consider product liability insurance. These types of policies protect against claims or lawsuits if a third party is injured or sustains property damage due to a defect in or malfunction of the business’s product.

Commercial Auto Insurance

If a business has any sort of vehicle that is used in the course of business, whether it be a single delivery van or a fleet of trucks or cars, those vehicles should be covered by a commercial auto insurance policy. Commercial automobile insurance policies can also cover hired and non-owned autos. Hired auto liability policies protect the business in the case where an employee rents a car for business purposes.  It does not, however, cover the person driving the car, who could be held personally liable for injuries and property damage. Non-owned automobile coverage can help pay for legal expenses your business may incur if an employee causes a collision while driving their own vehicle for business purposes. Again, these policies usually only protect the business: The driver may still be held personally liable for the damages caused by their negligence.

Errors and Omissions Insurance

Errors and omissions insurance is typically appropriate for insurance agents, financial planners, certified public accountants and other professionals who offer advice. This type of coverage protects the business from accusations of negligence, bad advice or inadequate work.

Directors and Officers Insurance

Directors and officers insurance covers any fees and costs that a company’s director(s) or officer(s)  pay or advance for legal defense as a result of claims or lawsuits brought against the director(s) or officer(s) for alleged wrongdoing while acting in their jobs.

Umbrella Liability

Umbrella liability policies are useful for tying together all of your coverages and filling in the gap between the total amount of coverage that you want and the policy limits for each insurance policy your business carries.  Having an additional amount above and beyond the policy limits provides a secure cushion between your business and any potential claims that could exceed your policy.

It is recommended that every business review its liability insurance policies, coverages and limits annually to confirm that the types and amounts of coverage adequately protect the business. Timing is also critical. We recommend your business’s insurance policies be reviewed at least 3 months before the annual renewal date, in order to give you the time to make necessary changes to the coverages or policies prior to the renewals. Vogt, Resnick & Sherak, LLP can assist you in assessing which type of liability insurance coverage is right for your business.