Why you Need Business Insurance? – (2018)
If you are a business owner, security and protection of your operation, is huge!
In order to find the right protection for your business, let’s review some common
business insurance definitions and information surrounding your policy.
As an agency owner, or potential buyer of one, understanding exactly what
your business insurance policy entails, will help further protect your investment!
So, let’s start with the basics, liability coverage!
Business Insurance Coverage – What is Limits of Liability?
What exactly is limits of liability insurance, and why do you need it?
If you are in business, this is something you should be already familiar with.
The reason being is, of it’s great importance to the future protection of your business operation.
You want to make sure that your business is fully protected,
starting with the number of limits on a liability insurance policy.
The General Overview
Limitations and maximum amounts exist on many insurance policy documents,
regardless if these insurance documents are personal lines business or commercial lines.
So, if you are in business, looking for liability insurance policies to compare,
make sure to compare the limits and coverage ranges of each policy.
For example, your business liability insurance policy
will contain policy limits on the contract.
This contract, the business insurance policy,
is what the insurance company will pay on a judgement.
Separate limits are also a deciding factor
in the business insurance protection game.
What are Separate Insurance Limits?
So, what exactly are separate insurance limits anyways?
Sounds like a great question, especially if separation of policy
limits and coverages can save you money.
In some cases, division of policy limits can serve to reduce insurance premiums
over the course of a policy term, as compared
to its counterpart, the combined policy limits.
Separate, yet Powerful!
Separate limits however, can be applied to
claims for property damage and bodily injury coverage.
In these cases, there might also be a combined limit that
can put a maximum amount on the pay amount.
This pay amount is what your insurance company
must pay out in any one policy period.
What is Per Occurrence or Claims Made Basis?
There is a distinct difference between both insurance policy types.
Professional liability insurance policies, use to be written on this
type of claims made form, per occurrence basis.
This meant that the policy would in effect, kick in coverage,
when the error, omission or original negligent act occurred.
If need the insurance company can provide a defense and cover for the claim.
For example, the per occurrence policy type is found to be
the most comprehensive of the two.
This is because, as an example, if an accident should take place
in the month and year of November 2000.
However, the claim was not reported until March of 2001,
the insurance coverage that was in
force of the year 2000 would cover that loss.
Claims Made Example?
Now, what if a claim made type policy was made?
There is a difference in the two types of claim types,
found on your liability business policy.
Claim made policy type, the insurance in force,
when the claim was reported, would pay the loss.
Under this type of insurance policy, the claim for the loss
can be made if they occurred during the policy term.
They would need a direct link to event for example,
before the start date of the policy.
Time and Policy Period
The time and policy period during the policy term,
which a claim can be made is, restricted compared to its counterpart.
The claims made coverage is more restrictive,
as claimed by many in the insurance industry.
You can find in most business liability contracts, a definition for the word, “insured”.
This word is defined as broad, meaning that there are many roles and functions to this definition.
Some examples of what an insured is, are listed below:
- Officers
- All partners
- Employees
- Directors
Legal Stance for Insurance Purposes
In present day, our legal system can identify where several defendants
can be named, just because of their association to a business.
This is an important detail, because it helps with policy
planning for future business practice and protection.
For example, a business may wish to cover other parties
besides the ones listed in the policy on a broad-spectrum basis.
If this is the case, then a policy endorsement can serve the purpose for this change.
This would come in the form of an insurance rider,
which can be added for additional insurance premium.
Business Insurance Element
There exists another business element to your
business liability insurance policy, which is exclusions.
Policy exclusions are common practice, and must be examined closer
for a better understanding of commercial lines insurance, business liability.
Personal activities that you do as an insured,
may result in the need for liability insurance coverage.
Liability Contract
Keep in mind that each kind of liability contract can generally
exclude the liability for another policy contract.
That is, if another policy, independent of the main or general one, exists outside of this one.
For example, you would not expect the president or CEO of a fortune 500 company,
insurance policy to cover outside of the expected insurance coverage, correct?
Yes, this would be correct.
This is because, your general insurance policy, would not cover risk or loss,
that was not included in the liability coverage.
As an example, do you think your business liability insurance policy,
would cover a friend’s medical condition, if they blew out their knee?
This type of risk or loss as described above, would not assist with
personal medical coverage as a business owner, especially, with business a liability insurance.
Also, location is another factor. It is also being shaped for online traffic,
with high rankings as they are currently.
It Is important to note, that the loss or accident,
must not happen outside of the physical location of the business.
What is Business Theft Insurance?
Before we dive into the general meaning and term of
business theft insurance, let’s look at the definition of “theft”.
It makes sense to start with “theft” since it will help to decipher,
exactly what coverage entails in this insurance programs.
The actual term, “theft” means, to cover all the acts involved in the process of stealing.
This is because, there are many different types of theft that exist
within the language of your business insurance policy.
As with any insurance policy, general, personal or commercial,
make sure to review its policy verbiage and definitions.
Policy definitions of Theft
So, what exactly is stealing?
Better yet, what does this term or definition mean,
when it comes to the actual definition, and act of word, theft?
The reason being, is that within this descriptive verb, theft, exist an
inner structure of more definitions, which we will examine.
The 3 terms associated with the term, theft, are found in both
your policy language of your insurance application, as well as other forms and channels.
These forms or channels, can come through both
the written language, as well as in thought and perception.
Literal Definition
The literal definition of the term, theft, comes to play
when discussing the language and meaning of theft.
This is because, the actual definition of theft, provides
an outline, to future policy protection and coverage.
This is because, the definition structure gives way,
to new terms and policy dissection of current terms.
Policy Relationship
This policy relationship of definitions and insurance language,
discusses the observation of different applications and meaning, to certain defined words or terms.
That is because, the actual word inside the policy language,
has more definitions and policy structure then once observed.
The policy term in discussion, is the term theft, that has another meaning or symbol.
This means, there exist, other forms of this word.
This definition can be found in the Webster Dictionary,
as well, as any general insurance policy.
Insurance Terminology – Other Policy Meaning
Without further ado, let’s examine the three types of policy meanings, for the word, theft.
3 types exist on, which are:
- Burglary
- Robbery
- other
Burglary – Policy Connotation
What is burglary defined as, anyways?
The term, burglary is defined with the unlawful act of
breaking into, and entering a building that is closed off.
The intent of this act is, to remove property from
within the business, or business premises.
Legal Stance
There exist 2 vital legal points that are used to determine
if a burglary was evident of forced entry.
The other point to address from a legal stance is,
the actual “intent” of the individual who committing the burglary.
Since burglary usually involves the desire to remove
the business safe, a lot of damage around the safe is prevalent.
This is because, to conduct a safe business operation,
regardless of establishment size or operation, implementation of tools is needed.
These tools include the use of keeping all safety devices, such a business safe, safe.
Prevalent Loss
Prevalent loss is a good descriptive adjective, since a lot of loss
is usually conducted out of this type of illegal crime.
Business safes, like most safes, are built with one thing in mind,
ultimate security and protection.
It is no surprise that explosives must be used in order to open,
or remove a safe from the business property.
If explosives were used to open the safes entry point,
the surrounding area around that safe,
would also be affected since explosives are one way
to remove a safes door or from the actual building.
Other Loss Types
Since explosives as mentioned above, can cause
two types of loss in a burglary, let’s look at them.
The first loss would be, the actual removal of any personal or
business property or contents, found from burglarizing the safe.
This type of loss, would be covered under this general liability business policy, as we have discussed.
The other loss type would be described, as any
indirect destruction to property or building.
This means damage to property or building, due to the explosive
or aggressive force, to open safes front door.
Probable Cause
Most insurance policies, are written or placed with insurance companies,
who can cover both types of loss:
- Forced entry
- Intent to break in and commit an illegal act
There exists another type of loss, that is found under
the umbrella term of, theft, which is identified as, robbery.
What is Robbery?
Robbery, is by definition, the taking of personal property.
This taking of property from another to make it
his or hers own, is one part of the definition of robbery.
The use of force, or threat of force,
is the other indicator that robbery is taking place.
Robbery Coverage Illustration
For example, if a person is subjected to threat of force or injury,
an after effect of fear kicks in.
It is beside the point if the actual use of force exists.
This is because, the intent of injury or force is enough to create fear.
This fear of injury, rather it be, direct or indirect,
is the culprit for the definition of robbery.
