Commercial Insurance Frequently Asked Questions

Q.  I have property that I have no interest in insuring. Is this possible?
A.  You may not have a choice. State law as well as other sources (such as a lien holder or lessor) may require you to insure certain property at a specified limit. If this is not the case for a portion of your business property many insurance companies are willing and have methods available (e.g., endorsements, exclusions, etc.) to help business owners control costs by managing their insurance budget. Contact your insurance company first; it can help you find ways to do this that will not result in a costly penalty for underinsurance.

Q.  Do I really need this much liability insurance?
A.  Unlike property insurance there is no way to determine the potential amount of a liability loss. For this reason higher limits always are recommended. Increasing liability limits does not usually cost much and will tremendously increase the value of your policy. Additionally, many businesses are required to furnish proof of liability insurance in the form of a certificate. Often those requesting the certificate require certain limits of liability before acceptance.

Q.  What is business income insurance and do I need it?
A.  Yes. Business income insurance is an essential coverage. While property insurance will pay to repair or replace damaged property after a covered loss, it does not pay for lost income from a cessation of operations. Business income insurance is like a disability policy for your business. It pays the net income and continuing expenses for a specified period of time to keep your business afloat during the recovery process following a covered loss.

Q.  Is there a comprehensive insurance policy for business owners with many coverage needs and a budget?
A.  Yes. Many businesses are eligible for a business owner’s policy (BOP). A BOP combines many important features of commercial property, general liability and business income policies. The BOP does not cover everything and is not available for everyone. However, those who qualify, appreciate the ability to manage so much coverage under a single policy.

Q.  I don’t want to sacrifice coverage but is there some why I can keep costs down?
A.  Yes. First, obtain quotes from at least three different business insurance companies. Some may offer special packages for your business type; others may qualify you for a BOP. You’ll never know what’s available if you don’t look.

Second, talk with the insurance company about flexibility. Some insurance companies may be more willing than others to work with you to find ways to tailor your coverage to help control costs without giving up valuable coverage or incurring costly penalties for underinsurance.

Third, ask about multiple-policy discounts. Insurance companies reward clients who have numerous policies with them. Remember that personal insurance coverage may help you earn a multiple-policy discount on your business insurance.

Finally, remember the old insurance adage: the more risk you take upon yourself the less premium you pay. This is why higher deductibles will save you money. Most companies offer deductible options – consider raising yours and pocket the savings. Be careful, however, to never raise deductibles to a level higher than you can afford to pay out of pocket.