By Rich Rozman
Editor's Note: How do I know what insurance to buy? How do I know I paid a fair price? How do I know if my broker will take good care of me? Those are the big questions when it comes to making sure you and your company are protected. The first question is the easiest to answer. The other two, much tougher. During the coming months, insurance industry veteran Rich Rozman will delve into some of the “mysteries” and problems of business insurance and help you become a wiser buyer of this essential business service.
First, the disclaimer: Nothing works for everybody the same way all of the time; but if you apply this information to your business carefully, it should be beneficial.
Core Coverage
The basic, core program of property/casualty insurance should have the following types of insurance:
Property. This coverage is for your buildings and business personal property that does not leave the premises, such as the structure, office fixtures, furniture and supplies, leasehold improvements, garage or shop equipment and tools, fuel tanks and fuel (not on trucks or cars), deicers, salt and uniforms.
Equipment Breakdown. This coverage is especially important if you own your building. This protects you against loss from power surges, arcing, brownouts, and damage to the building electrical system and property such as copiers and fax machines.
Crime. This protects your company against theft, disappearance or destruction of money; theft of money, supplies, etc. by employees; pension bonds; computer fraud; and embezzlement.
Inland Marine. One of the most misunderstood types of insurance, Inland Marine insurance is for computers, communications equipment and property that leave the premises. This includes such items as shovels, blowers, salt spreaders, plows, deicers, salt, toolboxes and their contents on trucks. It should include items that, in the aggregate, would be expensive to replace (maybe not worth insuring individually, but if they were all lost in a fire that swept through a garage or a tornado that trashed everything in your truck parking area). Important to note: If you insure the items on the Inland Marine insurance, do not duplicate the coverage on Property or Auto insurance. You won’t be paid twice.
General Liability. This critical insurance (usually required by your customers before they let you work on their premises) will reimburse you or your customers for damage to their property or for injury to people on their premises after you have performed your work; damage to premises that you rent; and, sometimes, libel, slander and liability assumed in a contract. It is critical that your policy include “completed operations” (to cover that slip and fall after you plowed or shoveled). Ask for clarification and get it in writing. You should see General Liability rating class code 99303 – Street Cleaning, code 99310 – Snow and Ice Removal – Contractor or a special endorsement CG 2292 Snowplowing Operations Coverage on your policy. If you don’t see any of these, ask your agent or broker why they are not there.
Business Auto or Commercial Auto Insurance. The BIG one! This complex insurance coverage protects you against loss from damage to your vehicles (collision, fire, theft, etc.) and damage caused to others while using the vehicle for driving and as equipment to perform your work. Examples would be damage to walls or structures while pushing snow or backing into a pedestrian or vehicle in a parking lot. Common parts to this insurance include liability (loss to others), medical payments (coverage for your drivers and passengers), collision (damage to your vehicles by colliding into objects), and comprehensive (damage to your vehicles that occurs not from collision but fire, theft, hitting animals, vandalism, etc).
Umbrella or Excess Liability. This insurance adds additional amounts of liability protection for relatively lower premium rates. It increases the effective amount of insurance protection available for general liability, auto liability and some miscellaneous types of liability. It is usually purchased in “layers” of $1 million. Often, the larger your customer, the larger the liability insurance requirement, and the only way to meet those large requirements is through the purchase of an umbrella liability policy.
Workers’ Compensation. This is required by law in all states—in all but four states, employers buy this from commercial insurance companies. The limits of coverage are described by statute, and premiums are determined by past employee injury expenses and current payroll.
Until next time, be safe.
Rich Rozman, CLU, ChFC, works with manufacturing, transportation and contracting businesses with SeibertKeck Insurance Agency, a 100-year-old insurance brokerage with several offices in Ohio. Contact him at 888-752-9119.
