Does Your Business Liability Insurance Policy Cover You the Way You Think It Does?
I recently became involved in two different projects in my business that caused me to review what type of business insurance coverage I had. One project was for a client that had minimum insurance requirements for any vendor who worked with their company, and the other project involved virtual and onsite work with foreign entities.
I’d had the same liability policy with an insurance company for the last 10 years. When some of my colleagues in the National Speakers Association secured a liability insurance policy for $698 less per year (yes, you read that correctly!) than what I was paying, I thought it was too good to be true. Here’s what I learned.
Verify that the stated profession covered on the policy will cover all facets of the work you do.
If I’m classified as a public or professional speaker, the policy might not cover incidents related to my onsite coaching and consulting work. What are all of your job responsibilities and scenarios? What type of incidents do you want to be covered for?
There are different types of business liability insurance. Do you need one, some or all of them?
During my research, I came across a page on Hiscox Insurance’s website which provided a simple summary. This helped me narrow down my search to the types I needed and study those types of policies more carefully. Here’s the Hiscox summary:
“General Liability Insurance
General liability is the most common form of liability insurance, providing a broad spectrum of protection, such as unexpected and unintentional bodily injury, property damage, and personal/advertising injury.
Professional Liability Insurance
Also known as errors and omissions (E&O) coverage, this type of business insurance protects you from claims of negligence while conducting business. You’re protected even if you haven’t made a mistake.
Errors and Omissions Insurance
This type of small business insurance coverage keeps you protected against claims of negligence or failing to perform any professional services you offer.
Business Owners Policy
A selection of small business insurance coverage that combines general liability and property insurance to protect your company’s assets.
Workers Compensation Insurance
A type of business insurance that protects you from the costs associated with an employee’s work-related illness or injury. Without workers compensation, employers could incur penalties and fines.
Cyber security insurance protects your business from cyber-attacks and helps you detect an attack early with a suite of tools to educate you and your employees about cyber risks to your business.”
Can you build your own coverage?
When I was discussing my needs with an insurance representative, I realized I wouldn’t be covered by the base general liability policy. We went through my list of needs and chose two different policies, plus we added an endorsement. Being able to do this in somewhat of a cafeteria-style selection saved me from paying for more expensive policies for coverage I didn’t need. Additionally, if a client requires a certain type of coverage I don’t have, I can add that temporarily for the duration of that project.
What are the policy’s exclusions?
I’m embarrassed to admit that I was too lazy to read through the 15 pages of exclusions in my now-former policy, and I was too lazy to make time to review it with an agent – until I participated in this insurance review. I discovered that I was not covered for one of the scenarios I thought I had been. Scary. When I received my new policies, I set aside 30 minutes to review every word to be sure that what I’d discussed with the insurance rep is contained in the new policies.
How can some people get quotes for such low liability insurance premiums?
Dale Wittick of PEEP Insurance explained to me that if you apply as an individual with an insurance company, there’s a minimum premium that needs to be met and paid. If you’re a part of an association, an insurance company can aggregate everyone in the association and eliminate the individual minimums. Additionally, most of those policies do not cover you internationally. You can definitely get lower premiums through your association membership, but you still need to go through the above steps to verify your coverage.
What criteria will affect the policy premium?
*your profession
*your yearly revenue
*the type of incidents covered
*the dollar amount each incident is covered for
*the aggregate amount the policy will pay
*domestic or international or both types of coverage
*the deductible amount
*whether or not you use contracts or service agreements with certain legal verbiage
*the types of exclusions
I’m paying the same total annual premium on my new policies as I was on my old policy, but now I have far more coverage and meet the needs of client requirements.
In a nutshell, this is the information you should be familiar with when you start your insurance review. It’s better to do this now than find out after a situation has occurred that you aren’t covered. Talk to representatives from two different companies to make sure you have all the information you need to evaluate and make a decision. While it’s not necessarily fun to study insurance for a couple of hours, it’s something that every business owner should do.
