INSURANCE FOR A HOME-BASED OR VERY SMALL BUSINESS
An extremely small business, such as one operated by one or two people out of a home, may not need workers compensation insurance. But it often needs more property and liability insurance than is provided in a typical homeowners policy. See the section on home-based businesses.
OTHER TYPES OF POLICIES YOU MAY NEED
In addition to the basic coverages highlighted above, there are various other policies needed by some businesses. They include:
- umbrella policies
- specialized liability policies
- terrorism insurance
As the name implies, an umbrella liability policy provides coverage over and above your other liability coverages. It is designed to protect against unusually high losses, when the policy limits of one of the underlying policies have been used up. For the typical business, the umbrella policy would provide protection over and above general liability and auto liability policies. If you have Employment Practices Liability Insurance, Directors and Officers Liability or other types of liability insurance, the umbrella could provide protection over and above those policy limits as well.
Specialized Liability Insurance Policies
Some businesses need specialized liability policies. They include:
- Errors and Omissions Insurance (E&O)/Professional Liability Insurance
- Employment Practices Liability Insurance (EPLI)
- Directors and Officers Liability Insurance (D&O)
- Business Identity Theft Insurance
Errors and Omissions Insurance/Professional Liability Insurance
If your business involves services such as giving advice, making recommendations, designing products, providing physical care or representing the needs of others, you could be sued by customers, clients or patients claiming your failure to perform your job properly had harmed them in some way. Errors and Omissions or Professional Liability Insurance covers these situations. The policy will pay any judgment for which the insured is legally liable, up to the policy limit. It also provides for legal defense costs, which can be substantial, even where there has been no wrongdoing.
Employment Practices Liability Insurance
Employment Practices Liability Insurance pays, up to the policy limits, damages for which an employer is legally liable for violating an employee’s civil or other legal rights. In addition to paying a judgment for which the insured is liable, it also provides for legal defense costs, which can be substantial even where there has been no wrongdoing.
Directors and Officers Liability Insurance
Directors and Officers Liability Insurance protects directors and officers of corporations or not-for-profit organizations if there is a lawsuit claiming they managed the business or organization without proper regard for the rights of others. The policy will pay any judgment for which the insured is legally liable, up to the policy limit. It also provides for legal defense costs, which can be substantial even where there has been no wrongdoing.
Business Identity Insurance
Business Identity Theft Insurance provides legal liability coverage to businesses that are victims of data theft. Such policies can also provide coverage to notify customers whose personal identification information may have been compromised and pay for services to provide identity theft recovery services for customers.
Prior to the terrorist attacks of September 11, 2001, standard commercial insurance policies included terrorism coverage as part of the package, effectively free of charge. Today, terrorism coverage is generally offered separately at a price that more adequately reflects the current risk. Insurance losses attributable to terrorist acts under these commercial policies are insured by private insurers and re-insured or “backstopped” by the federal government pursuant to the Terrorism Risk and Insurance Act (TRIA), enacted by Congress in 2002. The Act was renewed for two years in December 2005 and renewed again in 2007 for another seven years. Under TRIA, owners of commercial property, such as office buildings, factories, shopping malls and apartment buildings, must be offered the opportunity to purchase terrorism coverage. This requirement also applies to your Business-owners Policy (BOP)—your insurer must offer terrorism coverage as mandated by TRIA. In some cases insurers still include terrorism for no additional premium. In other cases there is a separate charge. You should confirm with your agent or broker whether or not your BOP or other package policy provides terrorism coverage. It is important to note that TRIA excludes certain lines, such as burglary and theft and commercial auto. Workers compensation is the only line of insurance that automatically covers acts of terrorism.
You can also get a quick Norfolk business insurance quote today from your independent agent Salzberg Insurance Agency.
Check out the other parts of this series: