Posted on May 17, 2014
Strategic business planning allows Texas companies to maximize their profits while also reducing overall costs. Any good business strategy will include commercial insurance to thoroughly protect companies and their assets from unexpected accidents and losses associated with lawsuits, injuries and natural disasters. To get the most from insurance protection, it is necessary to have complete understanding of the options available. Then, you may assess potential risks to determine the right amount of coverage for each unique business need.
Texas Liability Coverage
People make mistakes, and accidents happen. When they do, Texas business owners will find general liability coverage invaluable in providing complete protection for business assets. When someone sues a company for personal injury or property damage, having the right amount of insurance can mean the difference between continuing business operations, and having to close.
Commercial liability insurance covers accidents as well as injuries or damage caused by a company's goods or services. It will also pay for attorney fees and court costs associated with defending a lawsuit. The amount of liability insurance needed will depend on potential risks to a business as well as the business location. Certain states have higher damage awards than others so business owners need to have enough insurance protection to cover potential claims.
Workers Compensation Coverage
Texas is the only state where employers are not required to purchase workers compensation insurance to cover their employees. Those employers who do not purchase workers comp are called non-subscribers, but they still have certain guidelines they must follow. Non-subscriber companies must notify employees that they do not provide workers compensation insurance and must also notify the Texas Department of Insurance, Division of Workers Compensation of this selection .The Department must be notified of continued non subscriber status every year. For those non-subscriber employers with 5 or more employees, there is an additional requirement that any on the job illness or injury be reported to the DWC by the 7th of month following the injury.
Texas employers who choose to provide workers comp may purchase the coverage from private insurers, through self-insurance or group self-insurance. Workers compensation insurance will provide wage replacement and medical benefits to employees with work related injuries or illnesses. It also limits employer liability should an employee bring a lawsuit seeking damages against the business.
Whether a business building is owned or rented, business owners may purchase commercial property insurance to protect any business personal property housed inside the premises. Equipment, inventory, furniture and records are all goods that may be insured from various risks such as fire, theft, lightning and riots. This coverage will pay to repair or replace buildings and their contents along with replacing lost or stolen property.
It is important to review property coverage to make sure that all possible risks or perils are included in the policy. Some hazards such as flooding, winds or hurricanes and crime may not be included on standard property policies and additional endorsements or separate policies must be purchased.
Broad form policies cover common risks to property along with water damage, roof collapse and ice damage. Special form, or all-risk policies protect from all risks except those specifically excluded in the policy. Typical exclusions would include such events as flooding, war, earthquakes, nuclear disaster and pests.
Commercial Flood Insurance
Even if your business is not in a high risk flood area, commercial flood insurance is a type of coverage that all business owners should consider. More than 25 percent of all flooding that occurs in the United States occurs in areas considered to be low to moderate risk.
Business property insurance typically does not provide coverage for flood damage. Companies must purchase flood protection through the National Flood Insurance Program (NFIP). Some private insurance carriers will offer flood insurance in addition to the NFIP program, but high risk areas are required to purchase only through the federal program.
There is a 30-day waiting period for the insurance to take effect so planning ahead will ensure that companies are thoroughly protected from flood and surface waters. NFIP coverage is available in limits up to $500,000 for buildings and $500,000 for business personal property.
Wind Insurance for Texas
About fourteen coastal Texas counties and select areas in Harris County do not have wind or hail insurance available under homeowner or business property insurance policies. In order to purchase insurance protection from winds and hail, Texas business owners must buy their coverage from the Texas Windstorm Insurance Association (TWIA). This association is the insurer of last resort for windstorm and hail insurance.
Any buildings that were built, repaired or remodeled before January of 1988 are automatically eligible for coverage from the TWIA. Those built after that date must be inspected by the state and receive a certificate of compliance before this coverage will be issued. The association will provide inspection free of charge if notified prior to new construction or repair.
Additional Information on Texas Insurance
The Texas Department of Insurance website features additional information about commercial insurance in the state. Learn more by visiting http://www.tdi.texas.gov or calling the Department at (800) 252-3439.