Posted on May 16, 2014
While the State of Maine does not mandate commercial insurance, there are two main categories of insurance coverage that every company should consider for protecting their business. The two basic insurance coverages that every Maine business owner should discuss with his or her insurance broker are property insurance and general liability insurance. Additionally, most businesses are required to carry workers' compensation insurance which provides coverage for employees with work related injuries or illnesses.
Maine Liability Coverage
Although not required by state law, liability coverage gives business owners in Maine peace of mind. This insurance provides protection for companies from risks associated with lawsuits or property losses. Liability coverage protects businesses from potential financial loss if someone is hurt while on the business property or while using company products or services.
Commercial general liability specifically covers bodily injury, damage to property, personal injury such as slander or libel, and also protects businesses from lawsuits arising from false or misleading advertisements. It will not cover any claim resulting from employment practices such as harassment, wrongful termination or discrimination. Separate policy coverage for employment practice liability is available for these situations.
Specialized liability policies add additional insurance protection over and above standard policies. Your insurance broker can assist with determining the best policies for your industry and operations. Some of these specialized coverages include umbrella policies, theft & malicious damage and internet business insurance. Most liability coverages can be also combined with other coverages like property and business continuation insurance into a package policy known as a business owners' policy or BOP.
Because motor vehicle liability insurance is mandatory in Maine, businesses also need separate auto insurance coverage for their commercial vehicles.
Workers Compensation Coverage
Workers' compensation insurance coverage is required for most public and private Maine employers. The only exemptions for required workers' comp
coverage are for:
· Agricultural or aquaculture businesses with seasonal laborers that maintain employers' liability insurance with a minimum of $25,000 coverage and $5,000 in medical payment coverage.
· Agricultural or aquaculture businesses with less than six laborers that maintain a minimum of $100,000 of employers' liability insurance per full time employee along with $5,000 in medical payment coverage.
· Employers with domestic servants working in private residences.
Failure to maintain appropriate workers' compensation insurance coverage can subject employers to civil penalties of up to $10,000 or 108% of premiums required for periods when the employer did not have coverage, along with possible license or corporate charter revocation.
Commercial property insurance will protect business inventory, equipment and property. It covers damage losses as well as theft. All property whether owned or leased can be covered under commercial property insurance so that companies can include not only the actual building in their coverage but furniture, equipment, supplies, computers, valuable documents, artwork, electronics and even copyrights and trademarks.
Types of Property Insurance:
There are three types of plans for business owners to choose when evaluating property insurance.
Named Peril - the named peril or basic form covers specific events listed in the policy declarations such as fire, windstorm or vandalism. This basic form provides lower premium cost with limited coverage.
- the broad form covers everything in a basic policy with coverage for additional named perils based on need.
All-Risk - the all-risk coverage includes named peril and broad form as well as direct physical loss. The business owner policy, or BOP, falls under the category of an all-risk policy.
Determining Property Values for Covered Losses
Insured values are determined based on either replacement cost or actual cash value. Replacement cost will pay to replace or rebuild the property using the same quality materials as the original; whereas, actual cash value coverage evaluates the replacement cost less physical depreciation. Insurance property value is not the same as real estate appraisal values. Insurance values use the policy contract terms to determine replacement or actual cash values so care should be taken when choosing coverage for your property insurance policy.
Commercial Flood Insurance
Commercial flood insurance is available for companies seeking to protect themselves from the risk of flood damage. Businesses do not need to be located near water to be concerned about the potential of flooding. In fact, flooding can be caused by storms, backed up drainage systems, melting snow and a host of other natural and man-made conditions. Business policies with up to $1 million of flood insurance are available - $500,000 for business buildings and $500,000 for contents. Those who lease their business property are also eligible for content coverage of up to $100,000. Ask your broker for more information on protecting your business from flood damage.
Windstorm Coverage for Maine
When inclement weather strikes, business owners often find themselves face to face with the devastating effects that Mother Nature puts out. Windstorm coverage in Maine provides protection for damage caused by tornadoes, gales, tropical storms and even hurricanes. Some general property insurance policies exclude wind damage so it is important to review policies to make sure wind storms are covered. Common policy features in Maine will include a wind deductible that is usually a flat dollar amount separate from regular deductibles; a named storm deductible, which is damage caused by a named storm from the National Hurricane Center or a hurricane deductible, and a special deductible for damage caused by a true hurricane.
Additional Information on Maine Insurance