Posted on May 16, 2014
Running a business today requires careful planning and strategies designed to maximize profits and reduce expenses. Saving money should not mean foregoing the purchase of commercial insurance. Business insurance provides critical protection that can save a company from financial ruin should someone file a lawsuit or claim for an injury or property damage. Hiring an attorney to defend a company can be much more expensive than an insurance protection program designed to give business owners peace of mind and security.
Virginia Liability Coverage
To fully protect a business from potential lawsuits, general liability insurance is recommended. Business owners should also carefully review their assets to determine the amount of coverage needed to full protect the company from financial loss. This broad coverage takes care of legal expenses, settlements and judgments for bodily injury claims, property damage, death and medical expenses of injured parties. For anyone operating a business that sells products, product liability coverage will provide insurance if someone is hurt from a company's goods. Claims might occur from company products, the actual business operations, or employee actions.
While general liability takes carry of lawsuits from customers or other third parties, employment practices liability focuses its protection on claims of harassment, wrongful termination or discrimination by employees. Professional liability also known as malpractice insurance pays for wrongful acts, and errors or omissions by professionals such as doctors and attorneys.
Umbrella liability policies provide extra protection over and above the standard general liability insurance. Usually high risk industries or those with large assets will need to purchase extra coverage to make sure enough insurance or higher limits are available for any potential claims.
Understanding how claims are paid is also important in determining the amount of liability coverage needed. Policies are written on either occurrence or claims made basis. Occurrence policies cover claims that happen during the policy period without regard for when the claim is actually reported to the insurance company. A "claims made" policy only covers claims that are reported during the policy period or effective dates of the insurance.
Workers Compensation Coverage
The state of Virginia requires employers with more than 3 full or part time employees to have workers compensation insurance coverage. Underground coal mine operators must also maintain workers compensation if they have one or more employees. Sole proprietors and partnerships are not required to carry this coverage but may elect to do so if they desire.
Workers comp pays medical expenses and wage benefits to employees who experience on the job illness or injury.
Property insurance covers one of the biggest assets owned by businesses - their buildings and inventory. Without proper commercial property insurance, companies can quickly experience financial devastation if an accident or disaster occurs. Property insurance comes in two types of coverages: named peril and all-risk. A named peril policy will specifically list coverage for such events as fire, wind, theft or hail. This form of coverage will only cover events that are named within the policy. An all risk-policy, on the other hand, provides insurance protection for any peril that isn't excluded. So if an all risk policy only listed windstorms as excluded, any damage caused by wind would not be covered. Any other risk would be insured.
Commercial property insurance policies are purchased on either a replacement cost or actual cash value basis. Replacement cost simply means the dollar amount needed to rebuild or replace a building or any damage with like materials without any deductions. Actual cash value deducts depreciation from the value.
Commercial Flood Insurance
Standard property insurance policies do not provide coverage for flood damage. Commercial flood insurance must be purchased separately through the National Flood Insurance Program administered by FEMA. These policies typically also include coverage for mudslides and erosion caused by flooding. Businesses may apply for coverage up to $500,000 for buildings and $500,000 for building contents. There is a 30-day waiting period for coverage to become effective and so, Virginia business owners will want to plan ahead by applying early and having coverage in place before flooding takes place.
Tornado or Wind Insurance
Virginians typically experience tornadoes each year and being prepared is a necessity. Emergency planning and preparation should also include having the appropriate insurance in place to cover property in case of tornado damage. The term used within insurance policies is "wind storm damage", and most property insurance policies in coastal areas do not provide coverage for winds, tornadoes or cyclones. In fact, many states along the Gulf and Atlantic coasts require separate policies to cover wind or hail damage.
Additional Information on Virginia Insurance
Additional information about commercial insurance in Virginia is available by calling the Virginia Bureau of Insurance at (804) 371-9741 or visiting the Bureau's website at http://www.scc.virginia.gov/boi/.