DIFFERENT TYPES OF COMMERCIAL INSURANCE

The most common types of commercial insurance are property, liability and workers’ compensation. In general, property insurance covers damages to your business property; liability insurance covers damages to third parties; and workers’ compensation insurance covers on-the-job injuries to your employees. Depending on your business, you may want additional specialized coverages. Listed below are some of the different types of business insurance.

PROPERTY INSURANCE Property insurance pays for losses and damages to real or personal property. For example, a property insurance policy would cover fire damage to your office space. You can purchase additional coverages for business property, including:

Boiler and Machinery Insurance Boiler and machinery insurance, sometimes referred to as “equipment breakdown” or “mechanical breakdown coverage,” provides coverage for the accidental breakdown of boilers, machinery, and equipment. This type of coverage usually will reimburse you for property damage and business interruption losses. For example, this coverage would cover fire damage to computers.

Debris Removal Insurance Debris removal insurance covers the cost of removing debris after a fire, flood, windstorm, etc. For example, a fire burns your building to the ground. Before you can start rebuilding, the remains of the old building have to be removed. Your property insurance will cover the costs of rebuilding, but not of removing the debris.

Builder’s Risk Insurance Builder’s risk insurance covers buildings while they are being constructed. For example, a Builder’s risk policy would cover losses if a windstorm takes down your partially constructed condominium complex.

Glass Insurance Glass insurance covers broken store windows and plate glass windows.

Inland Marine Insurance Inland marine insurance covers property in transit and other people’s property on your premises. For example, this insurance would cover fire-damage to customers’ clothing from a fire at your dry cleaning business.

Business Interruption Insurance Business interruption insurance covers lost income and expenses resulting from property damage or loss. For example, if a fire forces you to close your doors for two months, this insurance would reimburse you for salaries, taxes, rents, and net profits that would have been earned during the two-month period.

Ordinance or Law Insurance Ordinance or law insurance covers the costs associated with having to demolish and rebuild to code when your building has been partially destroyed (usually 50 percent). For example, your three-story building is 100 years old. A flood destroys the basement and first two stories. Because more than 50 percent of your building has to be rebuilt, a local ordinance requires that the building be completely demolished and rebuilt according to current building codes. Property insurance covers only the replacement value, not the upgrade.

Tenant’s Insurance Commercial leases often require tenants to carry a certain amount of insurance. A renter’s commercial policy covers damages to improvements you make to your rental space and damages to the building caused by the negligence of your employees.

Crime Insurance Crime insurance covers theft, burglary, and robbery of money, securities, stock, and fixtures from employees and outsiders.

Fidelity Bonds A bond company covers losses due to a bonded employee’s theft of business property and money.

LIABILITY INSURANCE Liability insurance covers injuries that you cause to third parties. If someone sues you for personal injuries or property damage, the cost of defending and resolving the suit would be covered by your liability insurance policy. A general liability policy will cover you for common risks, including customer injuries on your premises. More specialized varieties of liability insurance include:

Errors and Omissions Insurance Errors and omissions (“E & O”) insurance covers inadvertent mistakes or failures that cause injury to a third party. The act must actually be an inadvertent error, and not merely poor judgment or intentional acts. For example, an E & O policy would cover damages arising from an insurance agent failing to file policy applications, or a notary forgetting to fill out notarizations properly.

Malpractice Insurance Malpractice insurance, or professional liability insurance, pays for losses resulting from injuries to third parties when a professional’s conduct falls below the profession’s standard of care. For example, if a doctor makes a mistake that other doctors of his specialty would not have made, his patient might sue him. A malpractice policy will pay his defense costs and any judgment or settlement. Malpractice insurance is available for doctors, dentists, accountants, real estate agents, architects, and other professionals.

Automobile Insurance Commercial automobile policies cover the cars, vans, trucks and trailers used in your business. The coverage will reimburse you if your vehicles are damaged or stolen or if the driver injures a person or property.

Directors’ and Officers’ Liability Insurance This type of insurance is generally purchased by corporations and nonprofit organizations to cover the costs of lawsuits against directors and officers.

WORKERS’ COMPENSATION INSURANCE Workers’ compensation insurance covers you for an employee’s on-the-job injuries. Businesses with employees are required by various state laws to carry some type of workers’ compensation insurance. In most cases, workers’ compensation laws prohibit the employee from bringing a negligence lawsuit against an employer for work-related injuries.  

Source: Findlaw.com

ECONOMIC DOWNTURN MAKING DRIVERS DRIVE UNINSURED

No Byline. Insurance Journal.  Approximately one in six drivers across the U.S. may be driving uninsured by 2010, according to a recent study from Insurance Research Council (IRC). Although the estimated percentage of uninsured motorists decreased nationally, from 14.9 percent in 2003 to 13.8 percent in 2007, the research group says the recent economic downturn is expected to trigger a sharp rise in the uninsured motorist rate. The study, Uninsured Motorists, 2008 Edition, estimates the percentage of uninsured drivers countrywide and by state for the period 2005 to 2007. The magnitude of the uninsured motorists problem varied widely from state to state. In 2007, the five states with the highest uninsured driver estimates were New Mexico (29 percent), Mississippi (28 percent), Alabama (26 percent), Oklahoma (24 percent), and Florida (23 percent). The five states with the lowest uninsured driver estimates were Massachusetts (1 percent), Maine (4 percent), North Dakota (5 percent), New York (5 percent), and Vermont (6 percent). The report also found a strong correlation between the percent of uninsured motorists and the unemployment rate: An increase in the unemployment rate of one percentage point is associated with an increase in the uninsured motorist rate of more than three-quarters of a percentage point. Based on current unemployment rate projections, the percentage of uninsured motorists is expected to rise from 13.8 in 2007 to 16.1 in 2010. “An increase in the number of uninsured motorists is an unfortunate consequence of the economic downturn and illustrates how virtually everyone is affected by recent economic developments,” said Elizabeth A. Sprinkel, senior vice president of the IRC. “Responsible drivers who purchase insurance end up paying for injuries caused by uninsured drivers.” The IRC estimates the uninsured driver population using a ratio of insurance claims made by individuals who were injured by uninsured drivers to claims made by individuals who were injured by insured drivers. The study contains recent statistics by state on uninsured motorists claim frequency, bodily injury liability claim frequency, and the ratio of uninsured motorists to bodily injury claim frequencies. The IRC study examined data collected from nine insurers, representing approximately 50 percent of the private passenger auto insurance market in the U.S.

Understanding Commercial Auto Insurance: Why You Shouldn’t Hit the Road without It

MAYFIELD VILLAGE, Ohio — As a business owner, the vehicles you use in your business are your lifeblood. Just like you’d never consider going on a job without all the necessary tools of your trade, you should never consider driving your business vehicle without the right insurance coverage.

“Insurance can be complicated and, for a business owner, making sure you’ve got adequate coverage means you’re protecting your livelihood,” said Chris Homewood, product manager, Drive Commercial Auto, the third largest commercial auto insurance group in the U.S. “Understanding what coverages and service options are available is the first step toward making better, more informed decisions so that you and your business are properly protected.”

Here are four easy steps to help you figure out your commercial auto insurance needs:

1. Decide How to Buy – self versus full service?

Commercial auto coverages are understandably more complicated than private passenger auto coverages. While some business owners are comfortable buying commercial auto policies directly from a company online or on the phone, others choose the in-person counsel of an independent insurance agent.

Independent agents represent multiple companies, so they can offer you a choice of coverage packages, prices and service levels that best meet your needs. And, because you likely have multiple insurance coverage needs – auto, general liability, worker’s comp, an umbrella policy, perhaps – they can put together an insurance package that matches up “best of breed” companies so your overall coverage package is made up of specialist companies.

Once you select how you’re going to buy your commercial auto policy, it’s time to think about what companies to consider.

2. Select a Carrier – and it’s not just about price!

There are a lot of companies offering commercial auto coverages. It’s important that you select one that meets the needs of your business. Chances are, getting your vehicles back on the road fast is one of those needs. And, we’re going to guess that you’re pretty busy all day during the week, so if you have questions you may want to ask them at night or on weekends, or get your answers online.

Some questions to consider asking include:

–How long has this company offered commercial auto coverages? Are they considered expert in this field?

–How are claims handled? Are they handled by company representatives or contracted third-party representatives? Are the people handling commercial auto claims specially trained?

–Does the company offer 24/7 claims service, ensuring that my claim is handled quickly so I can get back on the road–and back to work–fast?

–Does the company offer me choices in coverage options that meet my business needs?

–Do I have the flexibility of choosing a 6-month versus a 12-month policy?

–Does the carrier offer flexible payment plans?

–Can I manage my policy online?

“While price is important it’s not the only thing to consider when buying insurance. To be profitable, you need to keep your business vehicle on the road, so getting a damaged vehicle back quickly is critical and choosing a carrier with superior claims service is the only way to this,” said Homewood. “Unlike most commercial auto carriers that depend on independent adjusters to write estimates for large vehicle and truck repairs, Drive Commercial Auto also has in-house Field Specialists located throughout the country. The Field Specialist team continues Progressive’s commitment to settling claims fairly, accurately and quickly by offering in-depth knowledge and expertise in preparing commercial auto repair estimates.”

3. Know What to Buy – having the right coverages is important.

Coverages vary by state; a standard commercial auto policy generally includes those that provide coverage for injury or damage that you cause to someone else, your injuries, injuries and damages caused by uninsured or underinsured drivers and damage to or theft of your vehicle(s).

Here’s what you need to know:

Coverage for Injury or Damage That You Cause to Someone Else

–Generally referred to as Bodily Injury and Property Damage liability (BI/PD); covers your legal liability, up to the limit of liability you select, for an accident in which there is damage or injury to someone else

–Generally pays for the cost to replace or repair damaged property, the medical bills and wage loss incurred by an injured person, and other damages you are legally obligated to pay as a result of an accident. Does not cover your injuries, if you are the driver of your vehicle, or damage to your vehicle. If your insurance carrier covers an accident for which you are sued, they should also pay for a lawyer to defend you.

–Subject to a “limit of liability” that you select. 100/300/50 means your carrier will pay $100,000 for bodily injury per person involved in a claim, $300,000 for bodily injury per accident and $50,000 for property damage.

–You may instead choose “combined single limits,” (CSL). If you choose CSL of $300,000, that is the maximum amount your insurance carrier will pay for the total of all damages – Bodily Injury and Property Damage – resulting from any one accident.

Coverage for Your Injuries

–Coverage varies by state. Medical Payments covers the cost of reasonable and necessary medical care provided to you as the result of a motor vehicle accident and applies no matter who is at fault.

–You will be asked to select a limit amount which represents the maximum amount your insurance carrier will pay per accident.

–Personal Injury Protection (PIP), available in some states, generally covers medical bills and often covers wage loss and other costs. PIP coverage is subject to a limit often set by the state and applies no matter who is at fault.

Coverage for Injuries and Damages Caused by an Uninsured or Underinsured Driver

–Uninsured Motorists Bodily Injury and Property Damage covers medical treatment and damage to your vehicle (and sometimes other property) caused by someone who doesn’t have insurance.

–Underinsured Motorist Bodily Injury generally provides protection when the other person has liability insurance, but not enough.

Coverage for Damage to or Theft of Your Vehicle(s)

–Collision and Comprehensive cover the cost to repair or replace your vehicle if it is stolen or damaged in an accident, regardless of who is at fault. Collision covers you if your vehicle collides with another vehicle or object other than an animal. Comprehensive covers damaged caused by an event other than a collision, such as fire, theft, vandalism and weather-related damage as well as crashes with animals.

–Both coverages are subject to a deductible you choose; a higher deductible can mean a lower rate, but it’s also the amount that you’ll need to pay first in the event of a claim.

4. Know How the Policy is Priced – you can control some of your insurance costs.

Insurance companies generally price to cover the cost of future accidents. To do this, they use information about you, your vehicle(s) and your driving history, along with historical claims information.

Here are some tips for controlling commercial auto insurance costs:

–Driving history influences rates. Business owners should run Motor Vehicle Reports (MVRs) on potential hires. Ask your agent for help with this. While a Commercial Driver’s License (CDL) may not be required in your state to operate your vehicle(s), you may find that drivers who have them are more skilled.

–Proof of prior insurance is important. Never let your insurance lapse; if you do, you most certainly will pay more for your next policy.

–Ask your agent about discounts. There are a lot of them out there, including paid- in-full and renewal discounts.

–Credit. Some insurance companies use information about your credit history in helping to determine your rate. Ask your agent specifically what information each company looks at so that you understand what’s influencing your premium–positively and negatively.

The Bottom Line

Be smart about your commercial auto insurance policy to be certain you’re covered. Just as your customers call on you as a professional, consider calling on an independent agent as a professional, in your corner, advocating on your behalf.

An independent agent can help you with all of your insurance needs, assembling a package that combines insurance companies that specialize in each type of insurance your business needs, providing the level of service you want at a price that’s right for you.

Drive Commercial Auto, one of the nation’s fastest growing commercial auto insurance groups, specializes in fulfilling the commercial auto insurance needs of small businesses, insuring fleets of up to 20 vehicles with policy limits of up to $1 million. The company provides flexible payment plans and secure online payment processing by credit or debit card.

Progressive’s commercial auto coverages are available in two ways: directly to consumers by phone and over the Internet through the Progressive Direct(SM) brand or from a local independent agent through the Drive(R) Insurance from Progressive brand.

Chris Homewood, commercial auto product manager, Drive Commercial Auto, is available for interview.

COPYRIGHT 2006 Business Wire
COPYRIGHT 2008 Gale, Cengage Learning

Commercial Auto

We understand that safe drivers and dependable vehicles play a critical role in your company’s success. You use vehicles to provide mobility to your employees, equipment, and products. But road conditions, weather, and other drivers are out of your control. Just like the insurance on your own car, commercial auto insurance is there to provide coverage for you and your business.

Whether you manage just a few pickups or a full fleet of box trucks, you’ll find flexible coverage that works for your company. Our customizable coverage can include:

Coverage	Coverage for …
Bodily Injury	other people’s bodily injuries or death for which you are responsible
Property Damage	damages to someone else’s property for which you are responsible
Collision	your vehicle when your car hits, or is hit by, another vehicle
Comprehensive	your vehicle for losses resulting from incidents other than collision
Uninsured/Underinsured Motorist	you for bodily injuries, damages, or death caused by an at-fault uninsured or underinsured driver
Medical Payments	medical expenses to you and your passengers injured in an accident
Hired Auto	autos you borrow or rent
Non-Ownership	employees using their cars for the business