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Investing in Commercial Insurance

Commercial insurance is an important investment for all new and existing business owners. Business insurance protects owners from financial losses and other damages. If you’re not insured, financial losses can quickly add up in the event of a lawsuit, which can lead to bankruptcy.

Protect your business and your livelihood by being prepared should disaster strike. There are several types of commercial insurance policies, some of which can be bundled into a Business Owner’s Policy (BOP). Get to know these types of insurance and which will work best for your needs.

Business Owners Policies

Business owner’s policies, or BOPs, are designed to simplify risk management by combining liability risks into a single package. Small and mid-size businesses are eligible to purchase BOPs. These typically include:

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Business Interruption Insurance

This type of insurance covers loss of income owing to an interruption in day-to-day business operations due to unforeseen circumstances or catastrophe. These circumstances can include fire or weather-related damages. Depending on the policy, business interruption insurance may also cover the cost of moving to and working from a new location while damages are being repaired.

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Liability Coverage

This protects a business from assuming full financial responsibility for harm to third parties while they are on its property. Types of harm under liability coverage include bodily harm, personal injury, and reported property damage caused by the business owner or employees a business. Typically, liability insurance compensates the business owner for any legal fees or court costs incurred during third party lawsuits.

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Property Insurance

This type of insurance provides coverage for all buildings a company owns, as well as coverage for the contents of those buildings. Standard property insurance provides coverage for so-called “named” risks, meaning covered services are spelled out in the policy (fire, vandalism, water damage, etc.). Special property insurance is more comprehensive, and it is sometimes referred to as “all-risk” coverage.

BOPs, however, do not include coverage for commercial auto insurance, workers’ compensation insurance, professional liability insurance, or employee health and disability insurance. In these situations, separate policies are required to cover a business’s employees and vehicles.

Commercial Liability Insurance

Liability insurance protects you against accidents that occur on your property. If an accident is caused by you, your property, or by an employee, liability insurance will protect your finances. Based on your coverage limits, your insurance will pay for things like medical costs and property damage. It also covers the cost of legal defense, court fees, and any damages awarded to the person who was injured. These awards can include pain and suffering, punitive, and other compensatory damages.

Under general liability coverage, you are also protected from claims of slander, libel, copyright infringement, and false advertising. Lastly, liability coverage protects you from any damage to rented property. If you rent property for your business, liability coverage is vital protection.

Unfortunately, liability insurance is necessary because we live in an exceptionally litigious society. Regardless of your industry and its hazards, if someone gets hurt on your property, they are likely to sue. Liability insurance offers a lot of value for its price. Annual premiums range in price from $750-$2000, depending on your needs. That’s a small price to pay for insurance that can save you potential millions in the event of an accident.

Commercial Property Insurance

Property insurance is much like homeowner’s insurance in that it protects the building and surrounding property of your business. Unlike homeowner’s insurance, however, most business owners can deduct property insurance premiums from their taxes. Commercial property insurance protects your building and the equipment inside from flooding, fire, theft, and natural disasters.

Many businesses carry property insurance, but for industries that require expensive equipment, it is essential protection. Property insurance costs vary widely because they are proportional to the value of your property. A manufacturing plant with several million dollars’ worth of equipment will pay much more for property insurance than a small boutique clothing store. Either way, property insurance is an important part of your commercial insurance plan. Property insurance is often purchased as part of a Business Owners Policy (BOP) and combined with liability insurance and other coverage.

Worker's Comp Insurance

Texas does not require businesses to carry worker’s comp insurance, but it’s certainly something you should consider. Even though you aren’t required to carry worker’s comp insurance, you are required to exercise “reasonable care” to assure the safety of your workplace and employees. If one of your employees is injured on the job, their medical treatment and lost wages may be your responsibility. Worker’s comp protects you in two ways:

  • First, it ensures workers injured on the job get compensated for their injuries and lost wages. Worker’s comp will pay for medical bills, lost wages, and disability. Without worker’s comp insurance, these types of expenses can add up to tremendous financial damage to a business.
  • Second, it protects you from being sued by workers who were injured on the job. Worker’s comp operates like a “no-fault” clause, meaning that your employees will be eligible for compensation regardless of who was responsible. This decreases the likelihood of a personal lawsuit.

Unlike other forms of insurance, worker’s comp insurance cannot be bundled into your Business Owners Policy (BOP); therefore, it must be purchased separately. Worker’s comp insurance can be purchased through a private insurer or through the state fund.
At Austin Business Insurance, we work to help you find the best coverage for your business. We want to protect your business and family just as much as you do! Navigating the concepts and paperwork of commercial insurance policies can be confusing: that’s why we’re here.

We are committed to helping our clients understand their needs and make policy purchases as easy as possible. Our hope is to establish a long-term relationship with you and grow with your business. If you’re interested in learning more about commercial insurance, contact Austin Business Insurance today.

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