Posted on May 17, 2014
Rhode Island business owners work hard to build successful businesses, but it only takes one large lawsuit award to ruin a company. The cost to defend against claims, medical expenses and judgments all add up to large sums of money that could completely shut down operations if a business does not have enough cash flow at hand to weather this type of financial storm. Commercial insurance protects business assets from minor accidents as well as major catastrophic damages so that business owners can have the peace of mind and security to build their company's without fear that an unexpected event or accident could take it all away.
With proper planning, companies can gain valuable insight into the available insurance options in Rhode Island today and put policies into place that will provide the most comprehensive protection possible.
Rhode Island Liability Coverage
Today's increasingly litigious society can result in lawsuits for even the smaller mistake or injury. General liability insurance provides a critical safety net to protect business owners and their assets from being sued for personal injuries or property damages. General liability is available as a separate policy or part of a business owner policy or BOP. Business owner policies combine commercial liability and property insurance into one policy so that companies can realize significant savings over separate policy purchases. The only drawback to the BOP is that the coverage limits can often be low so if a company need higher limits, separate policies are required.
Determining the right amount of liability coverage requires evaluating business risk and company location. Companies in high risk industries or those located in states with histories of high damage awards in lawsuits will want to carry general liability insurance with high coverage amounts. In some cases, these types of businesses may also need to purchase an umbrella liability policy that provides additional insurance coverage over and above standard liability limits. These umbrellas usually add $1 million to $5 million in additional insurance.
Workers Compensation Coverage
Workers compensation insurance provides medical expenses and wage replacement when employees are injured on the job. The State of Rhode Island requires that companies with one or more workers carry the coverage. Exemptions to the workers compensation coverage requirement are provided for sole proprietorships, partnerships, independent contractors, agricultural workers, domestic help and real estate sales people & brokers.
There are severe penalties for failure to obtain and maintain workers compensation insurance for employees. Companies without workers comp are subject civil penalties of up to $1,000 per day and can also charged with a felony, facing up to 2 years in prison.
While many business owners in Rhode Island purchase property insurance for their buildings, they might not be aware of everything that is covered under this type of policy. Whether a building is owned or leased, business property coverage protects a company's physical assets including outdoor signage, furniture, equipment, inventory, landscaping and other people's personal property at the location. In the event of a fire, this coverage would pay to repair or replace destroyed buildings and any of their contents up to the policy limits. In the case of a broken water main, property insurance would cover document and record damage. Business owners may choose to insure for only a specific peril like fire, lightning, theft or explosion. They might also consider an all-risk policy that covers any peril not specifically listed as excluded in the policy.
An important consideration about business property insurance is to make sure the right amount of coverage is purchased. Policies can cover damage or destruction with either replacement cost value or actual cash value. If policy limits are not enough to cover complete replacement of a building or its inventory, business owners could experience out of pocket costs for being underinsured.
Commercial Flood Insurance
Flooding can occur just about anywhere nationwide. Property owners in low lying areas or near the coast need to be especially concerned with the risks of flood damage. Commercial property insurance does not provide protection from floods and surface water. Flood insurance is needed by every company desiring to maximize their insurance protection. It takes 30 days for flood insurance to take effect so planning ahead before periods of heavy rain or hurricane season is vital.
Commercial flood insurance may be purchased through the National Flood Insurance Program administered by FEMA. This coverage provides policy limits of up to $500,000 for buildings and $500,000 for building contents. Business tenants leasing their space may also apply for contents only coverage to protect their personal business belongings.
Hurricane & Wind Insurance for Rhode Island
Coastal communities along the Atlantic seaboard face the risk of hurricanes and severe wind damage. Many property policies provide some coverage for wind damage; however, many times this insurance will have hurricane deductibles that are based on a percentage of coverage. Rhode Island law does not allow insurance carriers to deny coverage to businesses located on the coast. They also do not allow a hurricane deductible to be more than 5% of a property's value.
Additional Information on Rhode Island Insurance