As a business owner, you will need at least Property coverages and Liability coverages as part of your small business insurance policy. This is true whether you work from home, from your own building or from a rental space. The term “business owner” can refer to scenarios as listed below, but not limited to:
1 – Building owners
Who rent out spaces to retail stores, offices, restaurants, auto repair shops, etc.
2 – Rented dwellings
Commercial and residential, student house, rooming house, seasonal dwellings – Owners or property management services providers.
Home offices, dental offices etc.
3 – Various industries
Convenience stores, retailers, wholesalers, light manufacturers, contractors, janitorial services, restaurants (without liquor), etc.
Coverages That a Commercial General Liability Policy Offers
The four main areas of coverage include:
- Bodily injury and property damage
- Personal and advertising injury liability
- Medical payments
- Tenants legal liability
Most importantly, the insurers have the right and duty to defend you for claims against you if the policy applies. You can keep running your business with peace of mind without worrying about the astronomical legal fees or compensation to the claimants.
Commercial General Liability (“CGL”)
Usually the CGL policy comes in two major types:
1 – Without products and completed operation
This is usually for premises exposures and will exclude liability arising out of your products and completed operation.
We see more and more lawsuits/litigation. People sue and seek damage for injuries they suffered from a slip and fall on other people’s premises due to poor or improper property maintenance. Typical problem areas are: Parking lots, walkways outside of the stores/offices, stairways/steps/entrance of the buildings (even carpets in a home office) etc. Business owners may at least want to have general liability coverage as part of their small business insurance policy to cover premises exposures for bodily injuries and property damages due to property maintenance. This type of liability coverage is for designated premises exposures and excludes your products and completed operation.
Be aware, your broker usually will make sure that you understand the coverage you have if you elect not to insure your products and complete operation. Some insurance companies may also require you to sign the “Products and Completed Operation Exclusion” as one of the policy subjectivities.
However, it is always better off to have products and complete operation coverage. More details follow.
2 – With products and completed operation
This is designed to particularly cover your liability arising from your product and completed operation on top of coverage for above mentioned premises exposures.
Your product can be any goods or products, other than real property, manufactured, sold, handled, distributed or disposed of by you or others trading under your name or a person or organization whose business or assets you have acquired. Your product can also be containers (other than vehicles), material, parts or equipment furnished in connection with such goods or products. Warranties or representations are also considered as your product.
If you are a contractor/handy man, light manufacturer, retailer/wholesaler, an owner of a restaurant, a convenience store, a flower shop, a home baker etc., you will want to have this coverage. Talk to an expert or a broker. A good broker should always remind you the importance of having proper coverage for your business.
Property Coverage in Small Business Insurance
Property coverage will cover your business assets in the event of destruction, damage or loss due to things like fire, theft, water, smoke, vandalism and other perils. This type of coverage is relevant for a number of business types, whether you:
- Own a building, and / or
- Have office contents (equipment, furniture etc.), computers, inventory/stock or tools, tenants improvements/betterments, lighting systems, carpeting, outdoor signs and even fencing and landscaping etc.
Talk to a Small Business Insurance Broker About Extras
Other than the above-mentioned coverages, an owner may also want to consider the following:
- Business interruption: If there is a fire or other perils causing damage/loss to your property, you may be forced to shut down your business temporarily. However, you still have to pay rent, payroll, taxes, etc. This policy covers your fixed costs and loss of earnings until you are back in business after your shutdown period.
- Vehicle Coverage: You will need an auto policy for your vehicles that your business owns. You will have to tell your broker or insurer if you use your personal vehicles for business.
Scenarios in Small Business Liability Insurance Coverage
Slip and fall claims are common issues that are related to premises exposure. A claimant alleges she or he tripped and badly twisted an ankle because of debris on the sidewalk in front of your grocery store. Your tenant alleges he or she fell on the black ice accumulated due to the dripping water from the roof and suffered a fractured hip while walking on the driveway to their unit.
Let’s say you sell a coffee machine, your product, to a client. The coffee machine then spills and burns the client’s hand. You may be found liable for the bodily injury to the affected client caused by your coffee machine. Your work or completed operation means work or operations performed by you or on your behalf and material, parts or equipment furnished in connection with such work or operations. It also includes warranties or representations or the providing of or failure to provide warnings or instructions.
For example: one of your staff installs a bathtub and it subsequently overflows and damages the ceiling and drywall, as well as the hardwood floors in the basement. Again, without adequate small business insurance coverage that specifically addresses commercial general liability, you may be exposed to a suit stemming from many types of (what appear to be) innocent or innocuous events. Talk to a specialist today to ensure that no such shortfalls exist in future or existing policy agreements.