Posted on May 17, 2014
No matter what type of business or its location, Arizona business owners need to secure commercial insurance to protect their livelihood. Business insurance protects companies from potential lawsuits or claims that could lead to financial disaster.
In the same way every business is unique, so too is the need for each company to have their own commercial insurance program. Every company needs to start with the basic insurance trio of liability, property and workers compensation insurance. These three insurance coverages supply protection from lawsuits, property damage and employee injury. Insurance coverage can be further customized to meet every businesses individual needs so that company owners have the right type and right amount of insurance to fully protect their businesses.
Arizona Liability Coverage
Arizona liability insurance offers valuable coverage to companies to protect them from injuries or damages that result in costly lawsuits. Liability policies specifically cover claims of bodily injury, damage to property, personal injury and false advertising. It will cover the medical expenses of injured parties and legal defense costs. Examples of claims that would fall under liability coverage include slip and fall accidents on business premises, or a customer becoming extremely ill from a company's food product.
Employees are not covered under general liability insurance unless they cause an injury to a customer, and then the customer would be taken care of under the policy. Employee injuries are covered by workers compensation and health insurance. An employment practices liability policy would cover employee claims of harassment, wrongful termination or discrimination.
Professionals need their own type of liability insurance as well. Errors & omissions, or professional liability, protects service providers from faulty service or failure to perform service claims. Malpractice insurance is a form of professional liability.
When extra insurance protection is needed, business owners may purchase additional coverage over and above their standard liability policy. This protection is called umbrella liability and usually offers an additional $1 million to $5 million of insurance coverage for those companies that are vulnerable to lawsuits or have significant assets to protect.
Workers Compensation Coverage
All Arizona employers are required to obtain workers compensation insurance coverage. Employees with work related injuries or illnesses are entitled to workers comp benefits no matter what caused the injury. This employer paid insurance pays medical benefits and temporary disability payments for injured workers. For those with permanent disability, it will continue to pay disability payments, medical care, and job retraining, if necessary. The coverage is not required for casual workers or domestic help.
An uninsured Arizona employer is subject to civil penalties of $1,000 for failing to have workers comp coverage with increasing penalties for 2 nd and 3rd offenses of not being insured. The court may order the business to cease operations until the employer becomes compliant with the state's workers comp laws.
Property insurance is one of the more commonly held policies by Arizona business owners. This insurance protects companies from property damage to buildings, inventory, equipment, computers and records. Basic commercial property insurance protects owners from theft, fire, hail, wind and lightning. Additional coverage may be obtained for other perils such as snow or ice caused roof collapse, and rioting. When purchasing commercial property insurance, businesses must decide between replacement cost and actual cash value. Under actual cash value, if property is damaged or stolen it would cover the value after depreciation. Replacement cost coverage would pay the amount needed to replace or repair damaged items with like materials at today's pricing.
Commercial Flood Insurance
Flooding is a nationwide occurrence and flood damage from regional and flash floods happen regularly in Arizona. Standard business property insurance policies do not provide coverage for flood damage so Arizona business owners must take steps ahead of time to apply for and purchase commercial flood insurance.
The National Flood Insurance Program offers commercial businesses coverage of up to $500,000 for buildings and $500,000 for building contents. Companies that rent their office space may apply for contents only coverage since landlord property and flood insurance will not cover tenant personal property. There is a 30-day waiting period for the insurance to go into effect, and so companies should apply without delay. It is also important to note that commercial buildings are only covered at actual cash value.
Wildfire Insurance for Arizona
Unusually hot summers and continued drought conditions in Arizona make the wildfire season from May to August ripe for blazing wildfires. Most commercial property insurance policies do not cover the extensive damage that can be caused by wildfires. Even if they do provide some coverage for fire damage, business owners often find out too late that they are underinsured. While coverage may rebuild destroyed structures, it is possible to experience losses that are greater than the market value of the business property. Additionally, should there be extensive damage that requires the company to temporarily close, business owners would also experience loss of income during that time. Business income and interruption insurance can help owners continue to pay their bills when their property is closed due to damage repair of an insured event.
Prior to wildfire season, it is important to review business insurance policies to make sure that there is coverage for wildfire and also that the policy limits are enough to replace the building as well as contents.
Additional Information on Arizona Insurance