Business Insurance FAQs

Business Insurance FAQs

What is Business Insurance?
Sometimes referred to as commercial insurance, this is a policy that covers a business against risks or losses that might occur during the course of doing business. It encompasses various policies that offer coverage for property damage, employee-related risks, and legal liability.
What does it do?
The purpose of this insurance policy is to keep you in business in the event of an unforeseen situation that might inhibit your ability to do your operations.
How Does It Work?
Business policies are contractual agreements between a commercial entity and an insurance provider. The agreements’ stipulations state that the insurance carrier shall share part of the risk with the entity. In exchange, the business agrees to make premium payments to the insurance company after a set duration. If a covered loss materializes, the business will file a claim and pay a deductible, and then the insurer will pay for the loss incurred.

Nevertheless, the insurance company does not pay right away, they first conduct an investigation to check the extent of the damage so they can process the claim. This is what allows them to know how much they should pay as compensation for the loss.

Business Insurance Cost
Business insurance cost varies due to factors such as the type of the business, as well as the type of coverages needed for their operations. For example, a home-based business can be insured for as low as $500 per year while a large organization with many employees and resources could pay as much as $500,000 per year. Nevertheless, one can lower these costs through proactive risk management practices while comparing quotes between different insurance firms.
Is it Tax Deductible?
Business policies are usually tax deductible. This holds true as long as the coverages provided are for commercial purposes only.
Is It Required by Law?

Business policies are required by the law in certain situations. These situations include:

  • Workers Compensation Insurance
    If you have employees, the law demands that you have a workers compensation insurance policy. This policy can either be from the state’s workers compensation program or self-insured.
  • Unemployment Insurance
    There are specific conditions where a business that has people under its payroll is required to pay unemployment insurance taxes. Check whether those conditions apply to your business then register it at the workforce agency.
  • Professional Liability Insurance
    Certain states require that some professionals have insurance against professional liability.
Do I Need Business Insurance?

Yes, any commercial operation needs to be covered. However, the type of coverage you need is dependent upon your situation. Nevertheless, the majority of small businesses need commercial property insurance, commercial general liability insurance, and business interruption insurance. When combined, these three policies form the most popular type of small business commercial insurance known as the business owner’s policy (BOP).Let us look at them in a bit more detail:

  • Commercial Property Insurance
    This policy provides coverage for all assets owned by the business such as buildings, equipment, vehicles, and inventory. The type of perils covered by this policy includes theft, fire, vandalism, and specified natural disasters.
  • Commercial General Liability
    This policy protects the business against third-party claims for bodily injury, medical payments, property damage, and defamation. This is the most common policy among small businesses.
  • Business Interruption Insurance
    This policy is applicable to businesses that need a physical location for their operations. It compensates the business for loss of income that follows an event that hinders the business from carrying out its normal operations. This includes situations such as power outages.
Does it Cover Embezzlement?
As mentioned previously, commercial property insurance provides you with theft/crime coverage. As such, it will also cover embezzlement or fraud by employees. However, there are more specific types of employee dishonesty coverages. For instance, you can purchase fidelity bonds that protect the business against dishonest practices by certain employee or all employees.
Does a Business Policy Cover Flood or Water Damage?

For your business policy to offer you coverage against flood damage, you will need a separate coverage that insures against flood. A standard commercial property insurance policy provides you with coverage against specific water damage situations with the exception of flooding. Moreover, water damage coverages vary between insurance carriers, as such, you need to compare different companies to get the one that suits your needs best.

Does a Business Policy Cover Lawsuits?
As mentioned in the commercial general liability section, this policy covers the business against lawsuits from third parties. However, the extent of the coverage depends on your specific policy. If you are looking for a liability policy that gives you coverage against extreme circumstances, you should consider going for the commercial umbrella liability policy. It will cover you against extreme lawsuits such as those exceeding $1,000,000.

However, the carrier will always carry out investigations to ensure that the injury you are being sued against was not a result of your negligence or the suing party’s intentional act.

Is Business Liability Insurance the Same as Workers Compensation Insurance?
Your general liability insurance policy does the following:

Protects third parties that come into come into contact with the business such as customers and vendors. If they get injured in the business’s premise, it will pay for their medical costs.

Protects the business against lawsuits from third parties.

Workers compensation does the following:

Protects you and your employees. Thus, will pay for any medical costs, lost wages, and death benefits if any member of the organization gets injured while on the job.

Handles lawsuits made against the business by its employees due to injury, illness, or death.

Business liability insurance deals with third parties that come into contact with the business and its employees while workers compensation protects you and your employees against injuries that may occur while on the job.

What is a Certificate of Insurance?
This is a document handed to the business by its insurance provider as proof of an existing insurance policy. The certificate of insurance also contains the key aspects and conditions of the policy.
Errors and Omissions Insurance
Commonly referred to as ‘E and O’, it is a policy that covers a business against services rendered by the business that did not yield the desired outcome or resulted in injury for the individual receiving the services. The policy also covers cases where the company or employee did not render those services at all.
I drive for Uber/Lyft, do I need a Business Policy?

While Uber and Lyft require that their drivers have personal car insurance that exceeds state minimums, they do not require that their drivers have commercial insurance.

The personal car insurance policy covers the driver but not their passengers. This is because auto insurance companies refuse to let the driver’s coverage to extend to their passengers if they were driving for hire.

To circumvent this obstacle, Uber and Lyft have designed special insurance policies which provide coverage for the passengers or pedestrians if the driver is at fault. This coverage is only effective if the driver is logged into the app. If they are not, then their car insurance policy will have to pay for the damages.

Moreover, if they are logged in, any accident that is the driver’s fault will only pay for the passengers and pedestrians involved but does not cover the Uber or Lyft driver.

How To Prevent Identity Theft

How To Prevent Identity Theft

Identity theft occurs when criminals steal your identity by stealing your driver’s license, your passport, your social security number, or even just your name and use the information for criminal purposes. Many identity thieves will use the information to take out credit cards or loans in your name so that they are able to make purchases, but you will be held financially responsible. Identity theft is something that has seen a dramatic increase since the rise of the internet. Companies are constantly trying to create products and services that protect against identity theft, and thieves are always finding new ways to steal information. Thankfully, you can purchase identity theft insurance which will cover you in the event that someone steals your identity.

States With Most Identity Theft

Although no state is completely safe from identity theft, there are some that have a higher risk than others. The top 10 places in the United States with the biggest identity theft and fraud problems in order are:

  1. Nevada
  2. Florida
  3. New Jersey
  4. Delaware
  5. California
  6. District of Columbia
  7. New York
  8. West Virginia
  9. Michigan
  10. North Dakota

If you live in one of these places, it’s a smart idea to look into identity theft insurance since your risk is higher. The FTC points out that while no one can protect you from having your identity stolen, being covered by insurance will help you recover much better and quicker if you are the victim of identity theft.

Most Common Methods of Identity Theft

There are many forms of identity theft, but some are more common than others. Below we describe some of the most common ways that identity thieves will try to steal identities.

Skimming – This is where thieves steal credit or debit card numbers by using a special device attached somewhere like an ATM machine or a gas pump. The machine reads the number and reports it back to the thief.

Phishing – This form of identity theft is done when thieves try to appear that they are financial institutions of companies. It is a scam where they will try to convince you to input your information over the phone or email.

Stealing – This is just plain old-fashioned stealing like stealing your wallet or purse to get either your ID card and/or credit cards.

Remote Stealing – Thieves can use a remote radio frequency device that reads your credit card information. There are companies who make wallet protectors that are supposed to block this from happening.

Consequences of Identity Theft

There can be consequences for both the thief and the victim when it comes to identity theft. If the thief is caught, they can be sentenced to jail time. Depending on how the crime is classified, the criminals will face a certain amount of jail time. If the identity theft is deemed as aggravated identity theft, then the thief faces at least two years of jail time whereas it can be less than a year if classified as a misdemeanor. Identity theft can have unintended consequences for the victim too. For example, the victim’s credit score can be detrimentally affected.

Time of Year Identity Theft Increases

The holidays should really be about holiday cheer and spending time with family. However, identity theft is the most rampant around this time of year. There are many reasons that contribute to the holidays being the most dangerous time of year for consumers to get their identity stolen. For example, sales like black Friday pose an ideal time for thieves to steal information from people. During Black Friday, both shoppers and employees are distracted and there is often a chaotic environment, so thieves are able to commit theft much easier. Additionally, many people choose to shop online and seek out the best deals for the holidays. These deals often show up on websites that a consumer isn’t familiar with, and these websites can sometimes be scams. It’s important to do your research and make sure the website where you’re entering your credit or debit card information is reliable and trustworthy.

Why You Should Consider Identity Theft Insurance

While identity theft insurance can’t necessarily prevent you from getting your identity stolen, it can help you to recover in the case that you are a victim of identity theft. Identity theft insurance often reimburses the victim for the money they have to spend reclaiming their financial identity and repairing their credit score. These costs can come in the form of legal help, paperwork processing fees, notary fees, lost wages, credit monitoring services, and even phone bills. Sometimes, identity theft insurance will be packaged into one of your other insurance plans like homeowners insurance. If it’s not packaged with another insurance plan, you can often get identity theft insurance for a low price.

Most Common Identity Theft Insurance Companies

Many insurance providers will bundle in or offer identity theft insurance as part of their services. However, there are also companies that specialize in this type of insurance. Some of the most popular ones are listed below.

LifeLock – This company is pretty well known. They offer identity theft protection for around $10-30 per month and reimbursement funds up to $1 million.

Credit Sesame – This company offers three different monitoring options ranging from around $10-$20 per month. They offer text and email alerts. In the case of a theft, they cover up to $50,000.

Identity Force – This company offers both individual and family plans for around $18-25 per month. They offer identity recover help and up to $1 million in insurance.

Identity Guard – This company offers identity theft protection plans from around $9-20 per month. They will send email and text alerts that are accompanied by ID verification. They cover $1 million in identity theft insurance.

While only really you can decide if you should get identity theft coverage, it’s smart to have some sort of plan in place in case someone is to get a hold of your credit cards, identification cards, or social security number. Stay safe and monitor your accounts on a regular basis.

Do You Need Life Insurance?

Do You Need Life Insurance?

When it comes to life insurance, people tend to have a lot of questions. You might be wondering if you need life insurance at all, how much life insurance you should have, or how much life insurance costs. These are all valid questions, but in this article, we will discuss why it is important to have some type of life insurance policy for yourself.

If you have a family, it’s important to get life insurance for obvious reasons. If you were to die unexpectedly, it leaves your family in a tough financial situation if you don’t have life insurance to replace your current income and time you contribute to your family.

Many young people wonder if they need life insurance at all. When you don’t have kids or a spouse, it can seem pretty insignificant to have life insurance, but there’s more to it than just giving money to your spouse or children when you die. When someone passes away unexpectedly, a lot more than just a funeral needs to take place.

For example, if you have any debt, someone becomes responsible for that debt after you die. Even if you’re married with no kids, your parents or closest relative could become responsible for that debt. If you have credit card debt, student loans, a car payment, or a mortgage for a house, these are all things that need to be taken into consideration. Unfortunately, our debt doesn’t always die with us.

Another reason to have life insurance is to cover funeral expenses. Funerals can be expensive, and the money that you leave behind with a life insurance policy can help contribute toward burial costs and any services your loved ones may want to throw.

If none of those reasons strike you as important enough to purchase life insurance, you should also know that as you grow older, life insurance premiums become higher. In general, life insurance is typically cheaper when you are younger and purchase initially. The longer you wait, the more you might pay. It pays to have life insurance. Speak with an agent today and see what plan would be best for you.

How Much Does Life Insurance Cost?

How Much Does Life Insurance Cost?

There are a lot of different factors to consider when choosing a life insurance, like how much coverage you need, what term life is right for you, and what you can reasonably afford to pay monthly and annually.

Life insurance rates can vary greatly from person to person. A lot of your individual rate depends on your gender, age, and some lifestyle choices. Overall, life insurance is priced around how long you’re expected to live, so the older you are when you purchase, the more you will pay. Typically, life insurance is cheapest for young women who are non-smokers and have no previous medical history.

Typical life insurance comes in different term life options that cover you for a certain number of years. For example, you can purchase a 20-year term life plan that will cover you if you were to die within those 20 years, or you can purchase a 30-year term life plan that applies the same way. There are life insurance policies that cover your whole life. However, those are a lot more expensive to purchase than ones with a shorter term life.

When you purchase life insurance in your 20s-30s, it will be cheaper annually than if you were to purchase later on in life. For a woman in her 30s with a policy amount of $500,000 and a 20-year term life, it can cost around $200 annually to have life insurance. It would cost around $330 for a 30-year term life with the same policy amount, and $4,142 for whole life coverage of the same policy amount.

For a man in his 30s with a $500,000 policy amount it would cost around $240 for a 20-year term life, $400 for a 30-year term life, and $4,700 for a whole life coverage plan. When someone purchases in their 40s, they can expect to pay about $100 more annually for the 20 or 30 year term life plans. Then when someone reaches their 50s, the cost of life insurance about doubles if not more.

Due to the nature of life insurance, it’s best to speak with someone and get an accurate quote for your gender, age, and health situation. It’s best to get quotes from different companies and shop around for the policy that is right for you.

Why is Car Insurance Mandatory?

Why is Car Insurance Mandatory?

Have you ever stopped to wonder why car insurance is mandatory, but other types of insurance, such as health care, are not? In the United States of America, all states require some form or car insurance except New Hampshire, which is the only state that does not require it.

Car insurance is mandated at the state level, so this allows each individual state to determine the regulation. States acting as individual powers can place any mandate they see fit on their residents, as long as it is not in violation of the restrictions placed on states in the constitution. Due to plenary power, states have more power to mandate necessary insurance policies than the federal government does. This may leave you wondering why 49 out of 50 states have chosen to mandate car insurance for their residents. There is no straight answer since it varies from state to state, but there are overarching benefits of mandating some type of car insurance, specifically liability insurance, for drivers.

As you’re most likely well aware, driving can be dangerous. It’s not something we want to think about when we’re out on the road, but it is a fact of life. We are human, and humans make mistakes. Making certain mistakes behind the wheel can be costly, and even potentially deadly. Picture the following situation. You’re driving along the road on the way to a nice dinner with friends and suddenly a driver rear ends you going 50 MPH. It smashes in the whole back end of your car in, totaling your car, and you get injured, causing you to need to go to the chiropractor. If the person who hit you didn’t have liability insurance, you’d probably be pretty upset. This is why most states mandate it. The benefits of mandating liability car insurance outweigh the costs.