Posted on May 16, 2014
When the unexpected happens, commercial insurance coverage can keep North Carolina businesses moving forward, while fully protecting their assets. Boasting a large tourism industry in the state, the potential for more customers is bright, but along with the increased foot traffic also enters the increased risk of a lawsuit or claim from unexpected injuries or property damage. Adequate insurance protection minimizes risk so that companies can focus on growing successful businesses while leaving their insurance company to handle the rest.
North Carolina Liability Coverage
The cornerstone of every commercial insurance policy is general liability coverage. Because of the growing nature of litigation in our society, businesses must do everything possible to protect themselves from lawsuits. General liability insurance provides critical protection of business assets when companies are sued for property damage or personal injury.
General liability may be purchased as a separate policy or combined in a package with over coverage in a business owner's policy or BOP. Most BOPs have low limits of coverage on liability so for businesses with significant assets or higher risk, a separate general liability policy is best.
Deciding how much coverage is needed is determined by looking at the amount of risk in the business and the company's location. Highly litigious states that award high damages will mean that companies need larger coverage limits.
Workers Compensation Coverage
Workers compensation insurance covers employee who are injured or become ill during the course of their employment. This coverage pays for lost wages and medical expenses. North Carolina is a no-fault state meaning that no matter what caused a worker's injury, the coverage will pay benefits as long as the injury occurred while on the job.
The state of North Carolina requires that employers with three or more workers are required to carry workers comp. The only exemptions are for agriculture companies with less than 10 workers, sawmill & logging companies, and domestic workers.
The state breaks up industries into 600 different classifications in order to determine rates. High risk industries typically have higher rates than less risky classifications. North Carolina businesses are assigned class rates for each employee based on their job duties.
Business property is protected from physical loss through commercial property insurance. Most often, it covers repair or replacement of buildings and personal property when damaged or destroyed by fire, hail, explosion or theft. This coverage also applies to goods and items within the building such as computers, inventory and company records.
Two types of property coverage exist: named peril and all-risk. With a named peril policy, only the specific event listed within the policy is covered so a company may have a policy for fire, wind, or hail. Unless the condition is mentioned in the policy, it is not covered. With all-risk policies, every peril is covered up to the policy limits unless it is specifically excluded from the policy.
When damage occurs for an insured peril, companies suffer from more than just the loss of property. If the company must close while being repaired then employees cannot work and customers cannot visit. That leads to loss of income from sales. Meanwhile, payments for taxes, insurance, utilities and debt must still be paid. Business interruption insurance helps business owners by insuring their income. So when they must temporarily close, this insurance will reimburse them so they can pay their bills and stay in business.
Commercial Flood Insurance
Because North Carolina is situated on the United States Atlantic coast, it faces the threat of flooding caused by tropical storms, hurricanes, heavy rains and even tornadoes. Standard commercial property insurance policies do not cover flood damage. Business owners must purchase separate policies to protect their companies from flooding. The FEMA administered National Flood Insurance Program offers coverage with limits up to $1 million total for businesses - $500,000 for business buildings and another $500,000 for contents of the building. There is a 30-day wait for policies to go into effect and so North Carolina companies need to secure coverage prior to any flooding event in the state.
Storm, Wind and Hurricane Insurance
Storms, winds and hurricanes frequently visit the shores of North Carolina, and property owners must concern themselves with protecting their investment from the damaging effects these hazardous storms can cause. Windstorms or hurricanes are not always included in basic business property insurance so companies need to evaluate their present coverage to determine whether wind, hail or hurricanes are perils listed as "covered" within their policies. If not, coverage for these events can be added to an existing policy by endorsement.
Additional Information on North Carolina Insurance
Additional information about commercial insurance in North Carolina can be found by visiting the state's Department of Insurance website at http://www.ncdoi.com or calling their Consumers Services Division at (919) 807-6750.