Tuesday, December 7, 2021

Commercial Insurance

Commercial General Liability
Commercial general liability, commonly thought of as the “slip and fall” coverage, insures a business against accidents and injury that might happen on or away from its premises, as well as certain exposures relating to the carrying out of its business operations.

It will protect you from payments for bodily injury or property damage to a third party, for medical expenses accruing to the underlying incident, for the cost of defending lawsuits including investigations and settlements, and for any bonds or judgments required during an appeal procedure.

Why do I need it?
Just as you would not operate a car without adequate liability insurance, you should not operate a business without basic commercial general liability insurance. You would be leaving yourself and your business vulnerable to lawsuits that could prove to have crippling effects on your finances and assets.

When we advise clients that commercial general liability insurance is a necessary cost of doing business, we occasionally receive the response that “No one comes to my office premises, therefore I don’t need this insurance.”

Similarly, the actions of your employee at a job site might result in bodily injury or property damage to third parties, putting your firm at risk for lawsuits.

How much do I need?
Considering the trend towards increased frequency of lawsuits as well as the higher judgment amounts, our advice is always to buy as much as you can afford to pay for.

Project owners are demanding higher limits for design professionals, usually anywhere from $2M to $5M. The logic behind their requirement for your firm to carry coverage is based on their concern that their insurance may be forced to respond in the event that you do not carry sufficient coverage. Similarly, if you lease office space, your landlord will require confirmation of your commercial general liability insurance. Project owners and landlords often request an endorsement to your commercial general liability policy where they are shown as Additional Insured.


Provides coverage for your employees and protects your business should an accident occur where the employee is injured on the job. It would cover medical bills and in some cases loss of wages. The premium for Workers Comp is based on the risk involved in performing the job and the amount of payroll disbursed for that particular risk.

Commercial Property
Buildings – the business premises should be insured for their full rebuilding cost (including professional fees and the cost of site clearance) and not just for their market value. You may need expert advice to calculate the rebuilding cost, which often differs significantly from market value.

Contents – your stock should be insured for its cost price without any addition for profit. Provision can be made for seasonal stock fluctuations. Plant and business equipment can be insured on either a “replacement as new” or an “indemnity” basis. If indemnity is chosen, wear and tear will be taken into account when settling any claims.

Engineering
Engineering insurance provides coverage against electrical or mechanical breakdown for most machinery, including computers. By law, many items of plant such as boilers, lifts and lifting machinery must be inspected regularly by a qualified person. Insurers can arrange to provide this service.

Business Interruption
Even minor damage to your property could seriously disrupt your business leading to loss of income and extra expenses.

Business interruption insurance will compensate for the short-fall in gross profit together with paying any increased working costs and extra accountants’ fees incurred.

When arranging this insurance you will need to estimate the maximum time needed to get your business working normally following the most serious damage. The insurers will ask for an estimate of your anticipated gross profit.

Theft
Contents are usually covered against theft providing there has been forcible and violent entry to or exit from the premises. Damage to the building resulting from theft or attempted theft will also normally be covered. Theft by employees is not covered – coverage against employee dishonesty can be written under another policy.

Money
Money insurance is on an “all risks” basis and covers cash, cheques, postage stamps and certain other negotiable documents.

Personal assault coverage may be included, which will provide compensation for you or your employees following injury during theft or attempted theft of money.

Error & Omissions
If your business provides professional advice or service, you would want to be insured in the event your advice causes a loss or injury to your client.

Surety Bonds
State / Federal Government jobs require a License and Permit Bond be in place in order to acquire the contract. A bond provides an agreement that monetary compensation will be granted should you fail to perform the specified acts as referenced in the bond.