Posted on May 16, 2014
Companies work hard to build and grow their business. With all the time, money and resources that go into becoming successful, it only stands to reason that protecting that investment will be a very high priority for today's business owner. Part of any business protection plan includes adequate insurance coverage to take care of any potential risks or misfortunes that might occur in the course of doing business. Whether customers are injured from a specific product, or a fire breaks out and destroys a business building, commercial insurance is designed to compensate or replace those losses.
Deciding on which policies are important is unique to each business. Based on a company's size and needs, differing types and amounts must be customized to provide the most protection available while also meeting company budgets. The only form of commercial insurance that is mandated for businesses to carry by the state of Colorado is workers compensation, but this coverage only takes care of work related injuries and illnesses. Other policies like general liability and property will offer greater protection of business assets.
Colorado Liability Coverage
Commercial liability insurance, also known as general liability, offers protection to business owners against losses that result from products, property damage or bodily injury. With a broad range of potential risks out there, companies can have the peace of mind knowing that general liability coverage will handle claims, pay any judgments or awards and also cover legal defense fees at the same time.
Without liability coverage, companies that incur large damage awards would be left to fend for themselves, paying out of pocket. Any event could potentially create financial circumstances that could also force a business to close. Having proper insurance coverage to handle these claims when they occur gives the financial protection needed in the event of such claims or lawsuits.
Umbrella or excess liability insurance policies are specialized liability insurances that provide additional coverage over and above a standard liability policy. For instance, if a company has insurance with coverage amounts up to $1 million, and a personal injury claim is awarded for $2 million, the insurance policy would pay the $1 million leaving the business to pay the difference for the other $1 million.
An umbrella or excess liability is purchased to provide an extra safety net of additional coverage amounts to handle any excess not covered by the general policy. With an umbrella policy of $1 million, this same business with a $2 million personal injury claim would have the entire amount paid - $1 million would come from the standard liability coverage and $1 million from the umbrella.
Workers Compensation Coverage
Colorado businesses with at least one full time or part time employee must have workers compensation insurance coverage. Workers compensation pays the medical expenses and wage replacement benefits of work related injuries or illnesses. Business owners pay the full insurance cost without any contribution from employees whatsoever. Large companies with 300 or more employees and $100 million in assets may elect self-insurance for workers compensation. They must apply for a special permit through the Division of Workers Compensation for authorization to self-insure.
Business property insurance insures the business building and contents of Colorado business owners. If covered events such as fire or theft occur, property insurance will pay to replace the building or compensate for its complete loss. Additionally, commercial property insurance will also protect business personal property and the contents of insured business buildings. Compensation for any loss or damage is based on the replacement cost or actual cash value.
Replacement cost covers replacement of losses or damaged property with brand new items of the same quality at current pricing. Actual cash value, on the other hand, pays the cost to repair or replace property based on its value at the time of damage or loss less any depreciation.
For those who rent their business space, commercial property insurance is available to cover the contents of leased buildings including furniture, equipment and computers. A landlord's commercial property insurance will not cover the contents of tenants so it is vitally important for tenants to obtain their own commercial coverage for property.
Moveable property such as that used by the construction industry requires inland marine insurance. This form of property insurance covers items in transit as well as tools used by employees off site.
Commercial Flood Insurance
Because commercial property insurance does not provide coverage for floods, business owners will need to purchase commercial flood insurance separately. The National Flood Insurance Program administered through the Federal Emergency Management Agency provides Colorado business property owners with up to $500,000 of insurance for buildings and $500,000 for contents of buildings. Those who lease their business space may also purchase "content only" flood insurance. Some companies will also add business interruption insurance to their flood coverage so that should their business be closed due to flooding or some other event like fire, the bills can still be paid to keep the business going.
Farm and Crop Insurance for Colorado
Farmers depend on their crops, animals and equipment to make a living. Protecting that livelihood is extremely important when issues such as weather, natural disasters and pests wreak havoc on family and business farms. Specialized insurance coverage to protect crops, livestock, farm structures and equipment can give farmers security so they know that should misfortune strike, they will be able to continue making a living without fear of having to sell or shut down farming operations. Crop coverage can be added to policies to protect crops for specific perils such as fire, lightning, hail and even theft which is particularly necessary for medicinal plants.
Wildfire Insurance in Colorado
The Rocky Mountains and foothills of Colorado are not only a beautiful site to see and visit, but they also frequently experience dangerous wildfires. Significant property damage and losses occur when runaway wildfires streak through dry mountainous areas. Millions of dollars in insurance claims are paid when replacing and repairing destroyed or damaged homes. Most business property insurance policies will cover damage due to fires, but business owners need to carefully review their existing coverage to make sure that they have enough insurance should a fire occur.
Additional Information on Colorado Insurance
To learn more about Colorado commercial insurance, contact the Department of Regulatory Agencies Division of Insurance at (800) 894-7855 or visit the Division's website http://www.dora.state.co.us/index.html.