NVSBE 2017: Lori Simmons - Business Insurance 101
So. Although. Owning, your own business can, be exciting, and a lucrative, pursuit. There are also risks, that come with that and so today we're going to go over some. Of the primary, insurance. Coverages. That you might need, with. Your business. And. We. Will take. Questions during, the. Presentation, if you have any as well as after. So. Just running the numbers okay. Thirty-five, billion, dollars. And out-of-pocket costs. For, lawsuits. For. Small businesses, that's that's, a unbelievable. Number. Of. The. Money that. Small. Businesses, are losing, due, to lawsuits, four. Hundred and seventy five thousand, is the average court, costs, for disputes, over technology. Transactions. And. Seventy. Percent. Businesses. That, seventy. Percent is the number of businesses, that will either raise their prices or, cut. Hiring, when they are sued so, it's, important, that you protect your assets and, have, the appropriate, insurance. Coverage, so. We're, going to cover today, who needs business, insurance coverage, what, coverage, does your business insurance need, and, why. Is it important. So. Anybody, who offers, a service, or a product, needs. Some type of business, insurance at the very least liability. Insurance. If, you, own, commercial. Property, rental, property, commercial, buildings retail space you, need business insurance, coverage, if you. Lead. An organization. Like a VFW, Post or an American, Legion, location. Those, activities. Also, need business. Insurance if, you're not for-profit you. Need business insurance it's, I, think a lot of people assume, that if they're in the not-for-profit space. They don't need business, insurance that's, not the case. So. This is a quote. From someone who owns. A promotional, company he's, a veteran, owned business, and. You. Know why why, he, thinks business, insurance helps, him I mean as, a small business he wears many, hats as most. Of you probably do as well. Insurance, can be a, little. Hard to understand, sometimes. You. Know not. Very many commercial, inch or insurance. Companies, offer all, of the coverages, that you need so you'll end up having to go out to multiple, carriers. To find the, coverage that you. Would need to, protect. Your business. So. Why is business insurance important. We've, gone over a couple of them but your, personal, more most importantly, something. To remember your personal, insurance. Excludes. Coverage for. Business property, and activity, so you. You may think that because you work out of your home for example that. Your business is covered and that's not true so, you need to protect your assets and, you need to be protected, most. Of all from these legal liabilities. In this sue-happy, world, that we live in today. So. The basics, okay, there's, general, liability. Professional. Liability, business. Property, coverage. Specialized. Liability, coverage, business. Income, or interruption. Coverage. And. The. First one we're going to talk about here is just general liability so, what, does it cover it covers, things like. Bodily. Injury, or property damage, medical. Payments. Defense. Costs. Personal. And advertising, injury, electronic. Data, liability. So. The, exclusions, for general liability, what. Are those it. Would be the, list of items that are under professional, liability insurance, okay, so your. Negligence, so. You. Give someone. Incorrect. Advice. Obviously. You wouldn't do that on purpose but.
It Does happen and it. Could cause harm. To the person that you've given that advice to if you're, working under your your, company's, name um it, covers the defense cost for something like that, in. The event that there's personal injury, or slander, and then. The claims associated, with that as well, so. Basically the, difference between, general. Liability, and professional, liability coverage. General. Liability coverage. Applies. To the losses that involve, bodily. Injury death. Or damage, to physical, property. Professional. Liability covers. Losses. Caused through your negligence. Okay. So that's the primary difference there. Business. Property, coverage that's, pretty. Straightforward. I think everybody. Knows that your property is computers. Any. Equipment that you might have related. To your business. Your, inventory. Those. Kinds of things would be covered, under business. Property, insurance. So. An example, would be. Someone. Breaks into your, your. Business and they steal your computer, equipment and you, have to file a claim if you have business property, coverage it, would cover that loss and you, would be able to be reimbursed so that you could replace that equipment. There. Are specialized, liability. Insurance policies. As well and I've. Listed a few of them here on the slide. Errors. And omissions insurance. Employment. Practices, Liability, director. And officer liability. Business. Identity, theft insurance. Terrorism. Insurance and workers comp. So. Under errors and omissions insurance. You, know that's going to cover you let's, say your consultant. You. This, would be a coverage, that you would want to look, into it. You forgiving. You, know wrong advice if, you make recommendations. And that recommendation. Causes. Harm to someone else. This. Coverage, would protect, you in that event. So. When. An, example. Of that would, be I. Have. A cosmetics, business and. I'm. Selling, lipgloss, and somebody. That buys. My lip gloss ends. Up with some, kind of an allergic reaction and, it, sends him to the hospital, and there are expenses, and they decide to sue me this, would be the type of coverage, that you would need to protect yourself in that, instance. Employment. Practice liability. This. Actually pays for up to the policy limits and, those. Are. Those. Are, you. Have options, for your policy limits - it's not a one-size-fits-all and. It. Covers you when. You, are legally, liable for violating and, employees civil. Or other legal, rights so. An example of, that would be if, you had employees. And. One. Of your employees comes, to you and says you know I'm being harassed by. Joe. Schmo my, colleague, and. You've. Been told that by that employee and, you. Don't take the proper steps to. Rectify. That. You. Let's say you decide. Oh it's nothing it'll go away and it, happens again if you, don't take. Measures, to. Rectify. That situation you. Could be sued under the. Employment practices. Sorry. If you had Employment Practices Liability and you were sued for that you. Would be protected in that case. We've. Heard a lot of a lot. Of this on the news lately and so. You. Know don't say it won't happen to me because I'm sure that's what a lot of those folks have said as well. So. The next one we're going to talk about is directors, and officers liability. So. That. Would be you, know not limited, to obviously. Not-for-profits. But that's one that comes to my mind because they. Typically are governed by a board of directors and. You. Know someone misspeaks. As a representative. Of that organization. You, you, might want to look into getting directors, and officers liability. Insurance. To, cover you in that in that regard. So, an example. Would. Be if, you, had an organization, and. They. Were in the fundraising business, and. Somehow. Money ends up missing and there. Was an embezzlement issue, going, on and. You. End up being sued as the as the, owner, of the not-for-profit. You, end up being sued because, this happened, and. The. Reason why you could. Have a case against you is if you don't have an audit process, in place for example to. Find. Out about something, like this in, the. Appropriate, amount of time if you don't take action, to protect yourself in that regard and then somebody Sue's you this, is the type of coverage that could protect you against that. The. Next one we're going to talk about is business identity. Theft and. You. Know I heard something the, other day that it's, not a matter of if, you're gonna get hacked anymore, it's it's a matter of when. You. Know it's it's very prevalent out there now everybody. Has databases, with customer, information you. Need to make sure that you protect that, customer, information and. Protect. Yourself, should. Something, happen to that database.
Somebody. Breaks into your office, and they steal your computers, and your database is on that computer and now. All of a sudden your. Customers, personal, information has. Been stolen as well you. Need to protect yourself against. That. Another. Instance, of business identity, theft. You. Have a business you. Dissolve the business. A. Criminal. Ends up filing. A tax return under. That business's name, even. Though it doesn't exist you've, dissolved it now. They, get a tax return. Refund. For. $140,000. Let's say and, the. IRS comes to you and says, hey you. Know, you. You got this money and you, say well no I my. Business was dissolved. You, have to be able to protect yourself against, that kind of business identity, theft as well. Workers. Compensation I, think you, know if you're a small business and you have employees you probably, know all about this, it's basically, protecting, your. Employees, and, protecting. You should. Something happen to them while they're on the job and so. Obviously. For. Those of you do have employees, this is a mandatory, coverage. You have to carry workers compensation. Insurance if. You have employees. Terrorism. Insurance this, is um this, is sad to me because. You. Know after, 9/11. We. Were. In a situation, where. We, needed to allow. Our businesses to protect, themselves against. Terrorism as well and so. You. As a business. Under. The Terrorism, risk and Insurance Act are. Able. To get terrorism. Insurance on, your business so. If. If. You own commercial, property. Shopping. Mall apartment, buildings anything, like that you, must be offered the, opportunity to. Purchase terrorism. Insurance. In. Umbrella, policies, you. Know a, lot, of people have umbrella policies, or catastrophic, liability. Policies, with. Their personal, insurance you, can also purchase them for your business insurance and again. This is something that is, becoming more and more important, as. We continue, down, this path of, you, know people suing, all. The time you really need to protect yourself and you, can get umbrella in insurance in increments, of thousand-dollar, thousand. Dollars millions, of dollars, and so. On. Your, homeowner, policy, or, your. Renters, policy, you have a minimum, amount of liability, insurance you, can buy, on, top of that and umbrella you can do the same thing with your business insurance, so you could actually purchase, an umbrella, policy that. Would protect you for 5, million 10 million. 15. Million dollars, in damages, and so and in, the the pricing, on that is extremely. Economical. You. Know for a few, hundred dollars a year you could actually have, an umbrella policy that, would protect. Yourself that you. Know one of the things that I want to drive, home. Today. In and, just, educating, you on the, need for insurance for your businesses, primarily. You, need to make sure that you understand, that your personal, coverage is not going, to. Carry. Over to your professional. To. Your business and so you need to have a separate, policy and, you, do that so that you can protect your personal assets, so. That so that those, assets. That you have personally. Cannot. Be touched. Other. Types. Of commercial, coverage, that you might need if you have a vehicle with your business you might need commercial. Auto insurance to, cover that vehicle, if, you have a delivery service or something like that you. You might have a van that that you have to deliver. Different, things you would need to get a separate, commercial policy, for. That, vehicle. Product. Liability insurance. Is, another coverage, dependent. On your needs business. Interruption insurance. So. With. Harvey, and Irma, the, businesses. That needed, to be closed, because of, the, hurricane. Business. Interruption insurance, would. Actually, in the in that situation. Cover. Your loss of use so. You would get compensated, for. A portion. Of your loss of use and if. You you, know have employees. The cost of their salaries, those, kinds of things so if you live in an area that, is prone to, natural. Disaster, and you have a business, this, is definitely something, that I would look into I think, you. Know would be extremely. Important. If you had a business in one of those areas and, then. Just on the personal, side I think everybody, understands, the importance of being covered.
Personally. So if you, you. Rent or you have it or you're a homeowner, you would need to have, property. And casualty insurance, as well I. Know. I went through that pretty quick but I wanted, to leave some time for question and answers, if anyone, has them yes. Yes. So, you, basically. False, advertising. So, you you. Advertise, and somehow that causes, some. Kind of injury it could be emotional injury, it doesn't have to be a physical injury, but. That's basically would. Be false. Advertising. Exactly. And it doesn't have to be. Intentional. You. Know you're. Covering yourself or. You know I didn't. Know what I didn't know kind, of a thing or I didn't, you know it was written this way and I didn't mean it to sound that way I'm you know it wasn't supposed to be taken that way I. Don't. Know the answer to that question to be honest with you I can. Get you an answer if I can get your card after this or I, can give you my card and you can email me I'll be, happy to get you that answer, yes. I. Believe. It is yes and, it would it would depend I mean the. Carrier, that, the. Carrier options, might change some. Of the. Some. Of the the, guts of the insurance policy might. Be a little bit different depending on where you live because, insurance, is governed by States and so. Your, state may have a, certain requirement that, another state wouldn't but it is it is available. Yes. There, are some that, prefer. To have a certain, level. Of business but, there are many, many national, carriers, that are in, the business of helping small businesses, and startups, so, regardless. Of how big or little your business is you can find coverage. The. One thing I will say on that that. You. Know you might end up being limited in, depending. On what your business does if, there is an extraordinarily. High. Liability. Probability. Then, you may struggle, to find, multiple. Options, but, in most cases you, know if, you find the right person to shop that around for you, you, know you can end up doing, really well and be. Covered appropriately. Any. Other questions. Yes. It is yes that, does matter, when. We were talking about the business interruption insurance, this, is some somewhat, related because, the states regulate, insurance. You. Know it's just like with your your, personal lines the, pricing, is going to vary depending on where you live but. But. I mean you you, can definitely and. I would say and this, is the unfortunate, thing for, for. Small businesses, right because your you're working on trying, to grow your business and, you. Don't have a lot of time for a lot of these admin, kinds. Of tasks. But. It is very important, to shop around, because. Of that exact point, you, know I've seen people save, thousands, of dollars by, shopping an around shopping their insurance around, and. Unfortunately. In the commercial space, rarely. Will you find one company. That can serve all of your needs and so, being able to go to a. Company. That has an agent, that will go out and shop, it around for you and do all the legwork for you and then come back to you and say okay here's, what I found, here's what I recommend but, it's your choice that would be the optimum, way to go there. Yeah. I think, in this situation, that is gonna, be the best bet for for. You to save money and also to get the appropriate coverage, I.
Believe. This presentation, is going to be available afterwards, but, I have business cards up here I'd be more than happy to email the presentation. Or or you. Can contact, me with any additional, questions, and I will get you answers for those as well. Hey. Thanks, everyone I hope you had a good week.