How to … Choose a property-casualty insurer

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Owning your own company is risky business. And as your business grows, your risks grow, too.
While most companies are prudent enough to hand over much of the risk to an insurance company, some are less diligent about performing regular insurance checkups to determine whether their insurance coverage remains adequate for their changing company.
Property and casualty insurance protects a business in several ways. It allows you to replace or repair damaged or stolen property, provides for lost income resulting from damaged or lost property and offers vital liability coverage.
Many insurance companies offer a business owner’s policy, which includes property and liability coverage. These companies typically tailor policies to specific types of businesses, such as contractors, retail stores, restaurants, offices or manufacturers.
Property insurance protects your business’s contents, in the event of theft, fire or other damaging agents. As you acquire more assets, it’s important to continually update your tally of what property you need to insure. Make sure you read the fine print in your policy to find out about any limitations or exclusions – for instance, your policy might protect against water damage from a broken water system but not a flood.
Casualty insurance covers you in case you or your employees are negligent and cause injury or property damage to someone else. For instance, if a customer slips on a wet floor in your store and fractures his kneecap, the policy will cover the cost of damages as well as attorney fees in the event you are sued. As with property insurance, be sure to review your policy with a fine-tooth comb to learn the exclusions or limitations.
Your business relies on a certain level of income to pay expenses. Make sure your policy includes business interruption insurance, which can provide money to pay fixed expenses and to compensate you for lost business income during the time your business is not operational because of property damage, such as a kitchen fire in your restaurant.
If your company owns cars or other vehicles, they must be insured. But keep in mind that if you or your employees will be using personal vehicles on company business, you might also need non-owned automobile coverage.
If your employees come down with a work-related injury or illness, worker’s compensation insurance will ensure that their medical bills and disability benefits will be covered (so will death benefits, which will be paid to the employee’s dependents in the case of a job-related death). Worker’s compensation rates are based on payroll and the industry – for instance, contractors can expect to pay higher premiums than a call center.
Premiums vary widely from carrier to carrier, so get several quotes before making a decision. You can purchase your insurance through an agent, who is a licensed representative for an insurance company, or a broker, who is licensed to represent a number of carriers. Either way, it’s vital that you work with a diligent professional who will take the time to get to know your business.
When choosing a policy, consider carefully the insurance company behind it. How long has it been in business? What is its reputation in the community? Several organizations rate the financial stability of insurance companies. Ask your agent or broker for a copy of the company’s rating from Standard & Poor’s, A.M. Best & Co. or another provider. Inquire about the firm’s hours of operation and find out how quickly it processes claims. Ask for references of businesses that are similar to yours and call them.

The Checklist

Be sure to perform regular insurance checkups to determine if your insurance coverage remains adequate for your changing company.
Make sure your policy includes business interruption insurance, which can provide money to pay fixed expenses and to compensate you for lost business income when your business is not operational because of property damage.
Keep in mind that if you or your employees will be using personal vehicles on company business, you might need non-owned automobile coverage.
Several organizations rate the financial stability of insurance companies. Ask your agent or broker for a copy of the company’s rating from Standard & Poor’s, A.M. Best & Co. or another provider.