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Frequently Asked Questions

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Business Insurance FAQ

What is business insurance?

Business insurance provides coverage designed to protect a business assets from a financial loss.

What does business insurance cover?

There is a wide range of different kinds of coverage within a business insurance policy that is customizable based on what type of protection you want for your business. The coverage you receive can also be based on the size of your commercial operation, the types of resources your business uses, and other factors/risks. Business insurance policies tend to include the following benefits and more:

– General liability insurance to address third party claims for injuries to other people.

– Professional liability/malpractice insurance to cover negligent or wrongful acts/advice made by your company or an employee that lead to another person’s loss or injury.

– Property insurance to cover loss or damage to your commercial business as a result of fire, storms, or other covered causes.

– Product liability insurance to cover against injuries, illness, or death as a result of a faulty product your business has created or used.

– Commercial vehicle insurance to cover business vehicles and their drivers if they get into a collision resulting in injury, death, and/or property damage.

– Workers compensation for employees that become ill or are injured in the workplace.

– Loss of income protection for when a covered event results in the interruption of business operations and becoming unable to pay rent or employee wages.

– Key person insurance to cover the loss of income due to key personnel becoming incapacitated or deceased.

– Records retention policies to cover the loss of imperative data and financial records.

– Cyber-crime coverage to protect losses due to hacking and other Internet related misadventures.

There can also be some specialty coverage to cover risks that related to specific businesses. For example, risks related to farm equipment for agricultural businesses or liability insurance designed for one-day events such as concerts. Business insurance can become very broad in terms of the different types of coverage.

How does business insurance work?

Business insurance acts like a contract between the insured business and the insurance company. In exchange of premium payments, the insurance company is willing to pay for the covered financial losses up to the limit of the policy.

How much does business insurance cost?

The price of business insurance varies due to a number of factors, including the size/risk of your business along with the types of protection you want on your policy. A small, at-home business might be adequately covered for only $500 a year. Business insurance for a global-wide corporation could be thousands upon thousands of dollars.

Does the law require me to have business insurance?

Yes, but under certain conditions and depending on what state your business resides in. Most states require businesses that have employees to purchase unemployment insurance and workers compensation insurance for their workers. Some states may require your business to purchase professional liability insurance in case of a lawsuit. Several states require businesses to purchase disability coverage for employees that are eligible for non-work related injury or illness. It is recommended that if you own a business that you research your state business laws, regardless of its size.

Is business insurance tax deductible?

Yes. As long as the coverage is for the purpose of operating a business, trade, or profession, business insurance can be written off as a business expense on your taxes. However, a company may not be able to deduct their business insurance premiums if the coverage is to protect a self-insurance reserve fund or to cover the loss of an earning insurance policy. It is recommended that you consult a tax specialist before deducting business insurance from your taxes.

What does “general liability” business insurance cover?

The general liability portion of a business insurance policy protects the company’s assets from paying financial obligations, court costs, and any settlements awarded to an injured party. This can also include claims of copyright infringement, libel, slander, and false/misleading advertising. General liability insurance will also provide coverage if a patron is injured while doing business with your company.

What is “errors and omissions” insurance?

Errors and Omissions, sometimes referred to as “E and O”, protects your business from financial losses due to a service offered by the business not delivering on the expected or promised results. It also protects the business in situations where the person receiving the services experiences a loss or injury. It also protects the business in circumstances where the company fails to provide the service at all. This type of coverage can also be known as malpractice insurance for medical practitioners and professional liability insurance for lawyers and financial advisors.

My business is fairly small. Should I get a business owner’s policy?

Business owner’s policy or “BOP” is a type of business insurance that is designed specifically for small or medium-sized businesses. Each insurance company has certain qualifications for eligibility for business owner’s policies such as revenue and number of employees, but if the business meets those standards it can get a compact package of a variety of business insurance coverages.

Business owner’s policies usually include liability and property coverage, but could also include:

– Property claims
– Professional liability
– Libel
– Copyright infringement
– Loss of income/business operation interruption
– Breakdown of equipment
– Premises liability
– Protection for products and completed operations

Does business insurance cover embezzlement and other financial crimes?

As long as your business insurance policy includes commercial crime/theft coverage, it should cover employee embezzlement, fraud, and other similar crimes. There are several different kinds of employee dishonesty coverage and commercial crime coverage that can protect your business from harm or loss due to dishonest acts by all or specifically named employees. You will have discuss with your insurance agent to see what specific protections you desire.

Will business insurance cover flood damage?

You will likely need to purchase a separate flood insurance policy rather than rely on your business insurance. While you may get some protection and compensation for water damage if you have commercial property insurance included in your overall business insurance policy, it usually covers instances of broken pipes or water damage due to vandalism not floods caused by natural means. It is important to review your policy with an insurance agent and purchase specific flooding protection if it is not included.

Will my business insurance cover lawsuits filed against my business?

As long as the appropriate business liability coverage is included in your plan, your legal costs should be covered in the event of a lawsuit. To ensure that your business has enough liability coverage, it is recommend that you purchase a commercial umbrella liability policy. There is a wide variety of liability coverages to purchase, but many could have coverage exclusions in cases where the injury/damage was expected or caused intentionally. You should speak with an insurance agent to see what types of business liability coverage is available to you to obtain thorough legal protection.

Where and how can I buy business insurance?

Freeway Insurance can help! We can get affordable rates from a wide range of insurance providers for quality business insurance coverage. Just visit our offices, give us a call, or get a free business insurance quote online.