With Spring Comes Flood Season; Make Sure Your Business Remains Liquid with The Proper Insurance

March 4 -- The Insurance Information Institute issued the following news release:

The above average snowfall this year is likely to create optimal conditions for widespread flooding this spring that could wreak havoc on businesses. Without flood insurance, many businesses may soon find themselves under water, according to the Insurance Information Institute (I.I.I.). Cash flow is the lifeblood of all businesses. But in the wake of a flood, too many business owners are forced to divert substantial funds to repairing flood-damaged property, instead of growing their business. And just a few inches of water can cause tens of thousands of dollars in damage, the National Flood Insurance Program (NFIP) reports. Even worse, almost 25 percent of small businesses never reopen their doors following a disaster, according to the Insurance Institute for Business and Home Safety (IBHS).

"Ninety percent of all natural disasters involve flooding," said Loretta Worters, vice president with the I.I.I. "From 2008 to 2012, the average commercial flood claim was more than $87,000; a substantial amount of money for a business to have to come up with on their own."

Flood and sewer back-up is excluded under most standard commercial property insurance policies. Sewer back-up can be added to a policy as an endorsement. Coverage for flood-caused damage to a business is available from the federal government through the National Flood Insurance Program (NFIP) and a few private insurers. When used in tandem with private insurance, NFIP coverage can mitigate or "buy down" large deductibles associated with commercial flood policies or simply provide additional coverage. A standard commercial flood insurance policy covers direct physical losses caused by flood as well as losses resulting from flood-related erosion caused by heavy or prolonged rain, coastal storm surge, snow melt, blocked storm drainage systems and levee or dam failure. For small business owners, flood coverage is available as an endorsement to a Business Owners Policy (BOP), available through some private insurance companies, usually if the business is located outside a flood zone. But check with your insurer. Flood insurance for small businesses is also available from the NFIP.

The I.I.I. offers four key strategies for protecting your business during flood season:

1. Find out if your business is located in a flood zone. Your local government office or commercial bank should be able to provide this information. Knowing if a property is in a floodplain is critical in order to keep your employees and property safe during a storm, as well as to properly insure the business. Be aware that the NFIP is rolling out updated flood maps that will expand flood zones in many parts of the country. Do not assume that because you were not in a flood zone last year you will not be in one today!

2. Consider buying flood insurance. Flood insurance premiums are calculated based on a number of factors: flood risk to the structure; the year the building was constructed; building occupancy; number of floors; the location of the contents; the deductible chosen; and the amount of building and contents coverage, among other things. You may buy a policy that covers flood damage to both the structure and contents, or a policy that covers damage to only one. A business may need only one type of coverage if, for example, it does not own the building in which it is located, and the lease agreement does not require it to insure the premises. However, even if the property is leased, you may want to buy flood insurance to cover any improvements to the site. If your property is in a high-risk flood area and you have a mortgage from a federally regulated or insured lender, you will be required to purchase a flood insurance policy. The maximum allowable commercial property limit for a small business is $500,000.

3. Include comprehensive coverage for your commercial vehicles. Flood damage to commercial or fleet vehicles is covered under the optional comprehensive portion of a standard commercial auto insurance policy.

4. Don't wait until a flood is imminent to buy flood insurance. There is a 30-day waiting period for a new or modified flood insurance policy to become effective, unless the lender requires that flood insurance be purchased in connection with a mortgage loan, in which case there is no waiting period. "Business owners should talk with their insurance professional about their flood risk and how best to protect against it," said Worters, adding, "And act now--March 20 is the first day of spring."

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The Importance Of Insuring Your Business

Insurance is one of those tricky areas.  No one ever really wants to talk about the possibilities of an emergency.  Without insurance be it life, auto home, health or business, everything you own could be at stake for loss.   All insurance is important including insurance for your business.  Business insurance covers your livelihood and the way that you bring in income so this is an incredibly important policy that should be purchased and budgeted for the minute you decide to become the owner of your own business.  Without the ability to bring in income you instantly sink.  It is important to protect your dream. 

Business insurance is a combination of several different policies combined into one.  Most people are familiar with general business liability insurance.  This is the base policy that can be purchased to protect not only your business assets but also your personal assets in case you are sued and a judgment is placed against you.  It is important to note that even if you are a limited liability company or a corporation you are not always completely protected under the statutory business structure.  Limited liability is not an absolute and extra protection and coverage is needed to protect you and your business. 

Another policy that can be incorporated into your business insurance is extra coverage to include property and casualty insurance.  This protection covers the location of the business, the physical property as well as the equipment and interior of the space.  Your landlord, if the building is rented, will have insurance to cover his building but this will not include covering your business and expenses.  This will only cover his intentions to rebuild the commercial space.  Your assets are not covered by his insurance policy.

Umbrella policies are also something that can be attached to your general business liability insurance.  Umbrella insurance is purchased to fill in the gaps left by other policies.  If a suit goes over the amount of your general liability insurance, an umbrella policy can be used to fill in.  This is a necessary policy to carry along with liability insurance especially in high risk industries where the risk of something catastrophic is greater.  Obvious difference in industries such as web development over pharmaceuticals exist and should be covered as so. 

Workman’s compensation insurance is another area that businesses should not be without extra coverage.  A workers compensation policy will cover you if any of your employees is injured on the job. It will cover lost wages and medical expenses on the injured employee which allows you to be able to temporarily employee someone to fill in for the injured employee.  The amount of coverage you will need for workman’s compensation will again vary from industry to industry. 

Other policies to consider grouping into your business insurance policy are: unemployment insurance, automobile insurance, business interruption insurance, disability insurance and even life insurance.  When looking into different policies to purchase it is important to remember that coverage is necessary and budget accordingly.  Be realistic in the amount of coverage needed as well as the amount the business can afford to spend yearly on its business insurance policies.

Don’t Neglect The Purchase Of Insurance In Business

When it comes to owning a business you will improvise a thousand times.  One place you should never get by is when it comes to your business insurance, especially your general liability insurance.  If you are planning on starting a business, insurance is a must.  You need to determine what type of protection you need, how much insurance you can afford and exactly what is required for your industry. 

General liability insurance is commonly known as commercial general business liability.  It is meant to be purchased and carried by business owners to protect the company’s assets and obligations. This insurance covers costs related to property damages and injuries that are caused by you or your employees.  Liability policies for business often also cover legal needs including compensation both monetary and punitive. 

Another thing that general liability insurance for your business covers is any damages to property against you as a tenant.  If damage is caused to the property in which the business is located liability insurance makes sure you are covered.  This insurance coverage can also protect you and your business in claims of any fictitious or deceptive marketing and copyright issues.

The question isn’t if you need business liability coverage it is how much coverage is needed and what additional policies are needed to make sure your business is completely covered in all cases.  Although you can purchase general business liability insurance on your own, it is not always in your best interest to.  A business owner policy should bundle liability insurance, property insurance, automobile insurance, umbrella insurance, workman’s compensations policies and more to offer your business comprehensive coverage. 

How much coverage is needed will depend on a few different factors including the industry in which your business is in, the risks involved, the location and the number of employees on staff.  Take for instance the difference between a web developer and a roofer.  The risks involved with construction far outweigh those of website developers however this is not to say there is no risk in web design, they just vary in severity.  The likelihood a web developer has carpal tunnel far outweighs his risk of breaking his leg whereas a roofers likelihood to fall and seriously harm themselves is greater.  This being stated you can see how the coverage and amount of coverage will vary greatly between different businesses as will the premiums. 

Before rushing out and purchasing the first policy offered you must do research and meet with several different business insurance agents to ensure you are getting the right coverage at a reasonable price.  With any product or service what you will pay from one business to the other varies, even when purchasing the same exact product.  When you own your own business you know every penny counts thus ensuring you are getting the most coverage for your money. 

Insurance is never important until you need it but of course as we all know it is too late at that point.  It is always imperative to understand what you are purchasing and it could never be truer than when insuring your livelihood. 

Insuring The Risk Involved In Owning Your Own Business

As a business owner you take on risks that don’t always meet the eye when you are first diving into starting your business.  One that is often overlooked is the risk you take employing others.  General business liability insurance covers your assets. What type of business insurance protects you against claims when an employee gets hurt on the job?  What protects you and your business from being required to support a claim for wages, benefits and further claims?  The answer is workers’ compensation.

Every business and every job has risk involved. On the job accidents are common and can range from something like carpal tunnel injuries or massive injuries like a machine malfunction causing the loss of a limb.  If someone is hurt at your place of business you will be held accountable for their related medical expenses, income lost and other expenses deemed reasonable.

As a business owner you can insurance yourself from losing everything by adding a worker’s compensation plan on to your business insurance plan.  In fact, each state within the United States has laws in place governing the coverage you must carry to cover your employees.  Insurance coverage will vary from one industry to the next depending on the risks involved within the scope of your business.

Workers ‘Compensation otherwise known as workman’s comp and workers liability are all policies that are carried by business owners to provide protection to the business if an accident does occur and employees are affected.  Most often the policy is carried to provide coverage for medical bills and deductible as well as lost wages during and after the accident until a full recovery can be made.

Most policies also offer coverage that is provided to the owner to cover expenses that occur in legal interventions if a claim is filed.  This is referred to as employers’ liability insurance.  It covers the cost of attorney’s, court costs, docket fees and more. The most important part of any business insurance policy is the coverage it provides to you as a business owner.  Your business is your livelihood and needs to continue to thrive.  Your business not only provides for you but for all of the other you employ as well.  You want to be covered to prevent a simple accident from eliminating your livelihood. 

Typically several different coverage options can be added on to a basic workmen’s compensation plan.  One option is to cover employees that work in other areas, even states, beyond the normal day to day operations of the business.  There is coverage that may not be mandated but that can be purchased to cover certain illnesses and coverage that covers dependants if a fatality is suffered by a dependant on the job. 

The point is that workmen’s’ compensation is not optional when it comes to buying business insurance.  The amount and types of coverage above and beyond what the state has in place as a requirement should be considered if the scope of your industry calls for it.  The better your coverage plan is the better you will be covered is something happens to one of your employees.  Being covered keeps your livelihood safe and allows you to continue to do business.