Posted on May 16, 2014
Running a business is tough in today's economy. Staying ahead of the competition and making a profit are primary focuses for business owners, and having the necessary protection to limit risk of financial loss due to accidents or injuries is a definite must. Commercial insurance protects businesses from the most common occurrences of property damage, theft, lawsuits and employee injury. By making sure the correct and appropriate amounts of coverage are in place, companies can rest easy knowing that a severe loss won't put them right out of business.
The expert assistance of licensed agents and brokers goes a long way in aiding business owners with knowing what coverage is right for them. Each specific industry is unique with its own set of needs that require specialized insurance coverage to fully protect the business. Having a basic knowledge of the different types of commercial insurance policies available will help in the selection process.
California Liability Coverage
General liability insurance provides comprehensive coverage that protects companies from a broad range of hazards. Standard commercial liability policies offer protection for premises, products and completed operations.
· Premises liability - covers claims of accidental injuries or property damage that takes place on business premises or during operations at another location.
· Product liability - protects companies that make, sell or distribute products from any bodily injury or property damage caused by their goods.
· Completed operations - takes care of any injury or property damage claims that result from finished work.
Commercial liability insurance has limits of coverage that pertain to each aspect of the policy. It is important to evaluate the potential risks associated with the industry to determine the appropriate amount of insurance needed. In some cases, companies will need an umbrella liability policy to add additional coverage, usually between $1 million and $5 million, to make sure that should claims occur, there will be enough insurance to pay for claims without exhausting the insurance.
Workers Compensation Coverage
California requires that all companies with employees must obtain and maintain workers compensation insurance. Because California is a no fault state, employees do not need to prove that their injury or illness happened, and the workers comp coverage will pay for any medical costs or wage payments for that employee while temporarily or permanently disabled.
California companies may purchase workers comp through private insurance carriers or the State Compensation Insurance Fund. Certain companies may also choose to self-insure by seeking certification from the Department of Industrial Relations and posting a large security deposit for receiving the certificate of self-insurance.
Workers compensation insurance premiums are determined by the specific industry classification of the company, and each insurance company sets a rate for that industry class.
Commercial property insurance is one of the more common coverages chosen by California companies. If property is damaged, stolen or destroyed, this insurance will pay for replacement or to compensate for the loss. Whether businesses actually own their buildings or lease them, property insurance protects the physical building, business inventory and building contents like computers, electronics and equipment. It will also handle any personal property belonging to customers or other third parties while in the care of the business owner to employees. Commercial property typically covers specified perils that are chosen by the business. Companies may choose coverage for fire, wind, hail, theft to name a few. Open peril policies are more comprehensive in coverage as they handle all losses except for specific exclusions such as earthquake or flood. These two perils require separate insurance policies for coverage.
Special coverage called inland marine insurance is also required for companies that transport their business property from place to place. If equipment is damaged or destroyed during transport, inland marine policies provide replacement or compensation up to policy limits.
Commercial Flood Insurance
Flooding can occur anywhere and anytime so California business owners will want to consider commercial flood insurance as part of their overall insurance protection program. According to the California Department of Water Resources, Flood Plain Management Branch, flooding emergencies were declared 483 times between 1950 and 2004. Of course, those figures do not include floods in small, local areas that never make it to declared emergency status.
The National Insurance Flood program provides commercial flood insurance with up to $500,000 of coverage for buildings and $500,000 for building contents.
Earthquake Coverage for California
Commercial property insurance does not include earthquake coverage. Business owners must purchase separate policies to cover these events. Because earthquakes strike without any sort of warning, companies will want to make sure that this insurance is in place prior to any seismic activity.
Because of the inherent risks of earthquakes in California, the state created the California Earthquake Authority and insurers contributed $1.3 billion toward the fund. Half of all premiums in the United States for earthquake insurance are paid for by state residents and businesses.
Wildfire Insurance in California
In recent years wildfires have caused major damage throughout California. Most commercial insurance policies include fire as a covered peril; however, business owners will want to review their current coverage to make sure that fire is covered. Insurance companies will evaluate whether a business is located within a high risk fire area and price the policy accordingly.
Additional Information on California Insurance