When should a business owner consider a commercial insurance policy and what is the most important coverage?

Commercial insurance policies protect businesses from risk associated with injury, disability, property loss, and other liabilities. They come in many shapes and sizes and can make discerning what is best for your business difficult.  By outlining the common components of commercial insurance policies, we aim to bring clarity to your choices.

As a business owner, you may be asking, what business insurance policies do I need?

You can customize your protection to address the specific risks that affect your company specifically, but there are several types of policies that apply to most business owners.

  1. General Liability Insurance

General liability insurance will likely be the first policy you place. What happens when someone is injured at my business?

This type of insurance covers expenses related to your legal liability for injuries, including property damage, bodily injury, medical expenses, and the legal costs to defend your company.

  1. Product Liability Insurance

What happens if someone claims my product injured them?

Product liability insurance covers expenses related to the legal liability for injuries and/or damage that was caused by a defective product of your company. This includes products that you manufacture, distribute, or sell. This type of coverage is tailored specifically to the type of product that you produce.

  1. Professional Liability Insurance

What if my business provides a service, not a product?

Professional liability insurance covers certain professional occupations, such as doctors, lawyers, etc. A common type of professional liability insurance is malpractice. This protects against services you provide.

  1. Commercial Property Insurance

What if my business is damaged and I can’t serve my customers?

Commercial property insurance covers the loss of and damage to your business property. This is applicable whether you own or lease space. It typically covers property losses and business interruption losses.

How is my business protected if I work from home?

Even if you work within your home, this type of coverage is more inclusive than relying on your homeowner’s policy. Similar to your homeowner’s policy, mass-destruction events like floods and earthquakes are generally excluded on these polices;so, if you believe these may be a threat to your business, check with your insurance agent to obtain a separate policy.

  1. Commercial Auto Insurance

How do I cover employees out on the road?

If your company uses vehicles as part of your normal operations, consider a commercial auto insurance policy that covers any claims against your business for events that happen while you or your employees are driving the vehicle during a workday.

  1. Individual Disability Insurance

What if I become unable to work? How do I replace that income?

Individual disability insurance is designed to replace your income if you become disabled and cannot work. For many business owners, an individual policy is necessary since they often don’t have access to group coverage (or at least not enough group coverage). SYM Financial Advisors can help you identify strategies that can benefit you. One tax strategy used by business owners is to pay individual disability insurance premiums personally (instead of through the business).  This practice can take a benefit from simply being tax-deductibleto a benefit that is tax-free. This allows you to achieve a higher net benefit amount without additional policies or premiums.

What is Business Overhead Disability Insurance?

This is a policy that covers business expenses if you become disabled and the company cannot function without you.

  1. Workers’ Compensation Insurance

Why do I hear so much about worker’s comp?

If you have employees, workers’ compensation insurance is a priority. This covers medical treatment, disability, and death benefits in the event an employee is injured or killed as a result of his or her work. Regardless of the work hazard (e.g., office work compared to construction work), a simple slip-and-fall or long-term medical condition (e.g., carpal tunnel syndrome from working at a computer all day) can still result in significant claims.

Bonus round: Business Owner’s Policy (BOP)

Can I get a deal if I bundle?

You may have also heard of something called the Business Owner’s Policy (BOP). Essentially, this is a term that refers to the bundling of several of these policies, typically property and general liability policies. Sometimes, you can add on additional protections, like data breach and professional liability insurance, too.

Are there insurance strategies I should consider?

SYM Financial Advisors work to help you identify strategies that can benefit you. One tax strategy used by business owners is to pay individual disability insurance premiums personally (instead of through the business).  This practice can take a benefit from simply being tax-deductible to a benefit that is tax-free. These tax savingsare often then applied toward achieving a higher net benefit amount without additional policies or premiums.

How do I decipher how much coverage I need?  How do I know I am getting the right kind of coverage?

As always, you can seek guidance from your SYM Financial team for help understanding these policies and how they may best serve your personal and business needs. SYM advisors help you plan financially for the what-ifs and identify where insurance can cover the gaps.  Your SYM advisor can assist in the conversation you have with your insurance agent to bring clarity that helps you make informed choices

Disclosure: The opinions expressed herein are those of SYM Financial Corporation (“SYM”) and are subject to change without notice.This material is not financial advice or an offer to sell any product. SYM reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs. SYM is an independent investment adviser registered under the Investment Advisers Act of 1940, as amended. Registration does not imply a certain level of skill or training. More information about SYM including our investment strategies, fees, and objectives can be found in our ADV Part 2, which is available upon request.