Insure Your Service Business
A service business is a complex operation. Dealing with clients, workers, accounting, banking and legal requirements every day is enough to make your head spin. We all know that insurance is important, but often it feels like insurance can wait until we are less busy.
Unfortunately, unless we make sure that the business is properly covered, it is often too late by the time there is an accident or some other loss is incurred.
Insurance is meant to protect businesses from losses that they cannot afford to cover themselves. Losses such as these could put a small company out of business, which is the reason why many choose to insure against them.
As small business owners, we pride ourselves in the quality of our work, however in today’s society, we may get sued even if we were not at fault.
How to Decide What Type of Insurance I Need?
The type of insurance you need depends on the type of loss you are trying to guard against. The safest way to make sure you are covered is to write down the risks that your business faces and discuss them with an insurance professional, such as a licensed Property and Casualty Insurance Broker/Agent.
Your Broker/Agent will guide you through the types of coverage that will cover the risks you are concerned about. Oakland California based Bizinsure allows you to compare coverages for your service business online and purchase instantly with your credit card. They also have a team of licensed agents available on the phone to guide you through selecting the appropriate coverage.
What if My Customer Says That I Need Insurance to Do a Job?
While it is always a good idea to have insurance, one of the most common reasons businesses get insured is that their customer insists that they have it. In this case, it is important to confirm that the coverage you are purchasing meets your customer’s requirements.
Some questions to ask include, what limits must you have? Must your customer be listed on the certificate as an additional insured?
The safest way to make sure your policy meets the requirements is to ask your customer for the requirements and share them with your insurance agent.
A wide range of insurance options are available to service businesses, some of the most common are General Liability and Workers Compensation. We’ll explain a bit more about these below and touch on some other types of insurance.
General Liability Insurance (GL)
This covers claims arising from your business that causes bodily injury, property damage, and personal injury. Imagine, for example, that you drop a tool whilst working from a ladder at a job site. The tool lands on and injures an employee of your customer. If the individual makes a claim against your business for the bodily injury they suffered, the claim (including related legal costs) would be covered by general liability.
Business Owners Policy (BOP)
Is similar to General Liability, but it includes Property Insurance. This is handy if you operate out of a fixed premises and also want some cover for your business equipment. BOP also typically include coverage for damages arising out of your employees using private or hired vehicles as well as losses as a result of employee dishonesty (crime).
Workers Compensation (WC)
Should one of your employees be injured on the job, a resulting claim would be covered by this type of insurance.
Employment Practices Liability (EPL)
Should you be sued by an employee for unfair discrimination, for example, that would be covered under EPL.
Other common coverages include commercial auto (covers vehicles owned by your business), crime, directors & officers and cyber liability. Depending on the nature of your operation, some or all may be beneficial.
Wow, that was a mouthful….how do I decide?
A licensed insurance broker/agent will be able to guide you, however, some of the things you want to think about include the rating of the carrier, appropriate limits and deductibles and where to shop.
AM Best Rating
Be sure to enquire about the AM Best Rating of the carrier behind the insurance you are being offered. “A” is the best in terms of financial stability.
Limits and deductibles
Limits refer to the maximum an insurance company will pay in the event of a claim. Deductibles are the amount of a claim that you must cover yourself before the insurance company will pay the balance. In general, the higher the limits and the lower the deductible, the more expensive the policy.
Blanket Additional Insured clause
Useful when you are doing work for multiple clients and they all want a certificate of insurance. With a blanket clause, your broker can add each new customer onto your certificate without additional cost to you.
Where to shop?
Independent Agents and Brokers will be able to show you options from a variety of insurance carriers so that you will be in a position to choose the best solution for your business. On the other hand, “captive” agents work only for a single insurance carrier. Captive agents have the advantage of in-depth knowledge of the products sold by the carrier they represent.