You know what they say about assumptions, right?
They’re an awful thing to have, especially when it comes to any kind of insurance coverage. It’s never a good idea to assume something is covered. For that reason, when you purchase commercial insurance, your assumptions could lead to the ruin of your business, or at the very least, a rude awakening. No one ever said that reading the fine print of an insurance contract is fun, but a lot of things we should do or that we’re required to rarely are. However, it could be your knowledge of the fine print that saves your investment. Don’t take your best friend’s word or your next door neighbor’s advice about what commercial insurance will and will not cover. Chances are, they haven’t read their policy either. As an appetizer and if numbers move you, here are just a few reasons you need to know what your commercial insurance policies cover:
- In 2007, 335K workers were injured while on the job.
- There are 500K truck accidents each year.
- Vandalism is the leading cause of arson for businesses.
- 1 out of 8 fatalities involve a commercial truck.
Knowledge is power, especially when it comes to business, and if you want a leg up on your competition, you should get well acquainted with the fine print. Here are some of the biggest — and often extremely important — points you’ll often find in the fine print of commercial insurance policies, and reasons many commercial policyholders don’t know about at all.
1. Comprehensive General Liability Is Comprehensive
Just because something is called “comprehensive” doesn’t necessarily mean it is. That may be the reason many insurance companies have completely renamed this policy. You may now know it as Commercial General Liability coverage, but it still has exclusions. Unless your claim falls within the parameters of bodily injury or property damage due to negligent acts, it may be denied. If your insurance company finds out that you cut corners when making a custom couch and it then fell apart, causing the owner bodily injury, you may not be covered. What does that mean between the lines of the fine print? Bad craftsmanship is an insurance exclusion.
2. Bundling Commercial Policies is Cheaper
Odds are every time you’ve gotten any kind of insurance quotes, you’ve been encouraged to buy other policies along with it, creating a “bundle.” A great majority of the time, keeping insurance policies with one provider can save you money, but do your research first as that’s not always true. Insurance companies rely on the fact that once you commit to one policy, it’s easier to sell you on others you need (or at times, don’t need). You think to yourself, “Why not?” It makes purchasing insurance easy and one bill is convenient, but what’s convenient isn’t always financially wise. Combining policies with one insurer won’t necessarily guarantee the lowest rates or best coverage. When you start searching for commercial insurance, compare individual policies as well as packages.
3. Property Insurance Covers Flooding
Unfortunately, this seems to be one of the most prevalent misconceptions across the board. Let me reiterate this in case you missed the flood insurance commercials that finally made their way to a mainstream outlet after too many people made this terrible assumption and lost everything. Flooding is never included in any kind of property insurance. It must be purchased through the National Flood Insurance Program (NFIP). The sooner business owners realize this, the quicker they can take action. Sadly, many don’t realize until it’s too late. You may have heard about such horror stories after Hurricane Katrina, and most recently, victims of Hurricane Sandy were dealt a double blow when clean up time came. Some business owners weren’t covered at all, and the cost to get a business back into operation may be enough to close its doors permanently. According to the Small Business Association (SBA), 50% of businesses fail, but this isn’t one of the reasons you want yours to.
4. Liability Insurance Covers You Worldwide
When you book your business trip to Thailand, don’t assume your commercial liability policy bought a ticket too or that it’s folded up in your luggage. Whereas homeowner liability policies normally travel with you, commercial liability is more of a homebody — the lights of Paris aren’t alluring to them and they don’t care to watch the changing of the guards in England. Standard coverage areas normally include the U.S., Canada, and U.S. territories. If you know traveling outside of the country is going to be standard business procedure, find out about adding a worldwide endorsement to your policy which will protect you no matter where you go.
5. Auto Insurance Covers Vehicles You Don’t Own
If you rent a car or drive a car that you don’t own, your commercial auto insurance will not cover you if you’re in an accident. Forgoing rental insurance when you have to make a cross-country business trip may sound okay, but it’s likely you’re about to take a trip on the uninsured highway. To get coverage for non-owned and hired cars, consider adding an endorsement to your policy. If your employee causes an accident while getting a business lunch and you’re subsequently sued, you’ll usually be covered.
You would never think about sleeping on the job (well perhaps you feel like it sometimes, but odds are you don’t do it), so as you begin searching for commercial insurance, consider it another job. Although agents are the experts in their line of business, you are responsible for your company, and you know it better than anyone. Protecting it should be your top priority, and understanding your policy is one of the most important ways to guard your investment.
