Insurance Explained – Operational Insurance
Does Your Business Have the Right Operational Insurance Coverage? You May be Surprised at the Answer.
Whether you operate as an independent contractor, a small business, or a large company, you need relevant business insurance coverage. This is necessary to keep your business solvent in the event that you need to settle claims for damages or loss made against you or your business. But, do you have the right operational insurance coverage based on your business needs?
Aligning your business operational risk and insurance
When building out your business insurance coverage, you need to align your business operational risk alongside the insurance coverage needs. This means ensuring that the insurance you buy offers the protection you need based on the type of business you operate.
There is no one size fits all when it comes to policies covering business operations. Industries are different. Regulatory requirements differ by industry and business types. What you do versus what someone else does in a similar industry can even carry separate risks for both of you.
This is where looking at tailored business insurance solutions and not just insurance policies are important. When you look at business insurance solutions, you are aligning your insurance policies as part of your business operations for better coverage and protection.
Business Insurance Options based on your Operations
There are a variety of insurance options that cover business operations. Some are general, but even under those general policies – like General Liability Coverage – there are additional rider needs that should be tailored to your business operations.
General liability coverage
General liability insurance is necessary where you need protection to cover claims against you or your business for liabilities. At any point, your business could be faced with a suit alleging you or your employees were negligent in the performance of their duties and these activities resulted in harm or loss to a third party. Where a third party claims that you or your property caused bodily injury, harm, property damage, your general liability insurance will cover any necessary legal defense costs or any costs for damages that you are required to pay.
Completed Operations Insurance
Imagine that a few months after you’ve installed an overhead garage door that it closes on a car, damaging the car in the process. Or, you recently installed a new roof on a building. But, following a storm, water enters through the roof damaging various equipment and furniture. In both cases, the injured parties seek damages from you the contractor who had done the installation. How will you maintain the financial stability of your business if you have to settle these claims for breach of contract or negligence?
That’s where complete operations insurance comes in.
One of the areas covered by general liability insurance is “Completed Operations Insurance”. This covers a contractor’s liability for injuries or property damage after the contracted operation ends. This is especially important if you work in the construction, manufacturing, or medical fields. While this type of coverage is often included in General Liability Insurance, you may choose to also purchase separate policies in amounts that are more than what is allowed under the general liability limits.
Professional Liability Insurance
As a professional that interacts with the public, liability insurance is a necessity. This is especially important when you work in an industry where claims can be made that error or omission in the provision of your service led to bodily injury, property damage, or loss. This insurance coverage can be referred to as Errors and Omissions coverage, or if you’re in the medical field, Medical Malpractice Liability Insurance.
Professional Liability Insurance is often sought by doctors, physicians, accountants, engineers, architects, contractors, etc. Once you work with people and an error on your part may be construed as leading to a loss for the party for which you are working, then consider getting professional liability insurance. In some industries it’s a requirement. For others, you should consider it as part of your business operations to protect you and your assets.
Also, once your business offers any form of advice as part of your operations, then you should invest in professional indemnity insurance, no matter how accurate you think you may be.
Business Automobile Liability Insurance
The typical scenario for an automobile liability is a motor vehicle accident that may have injured drivers and passengers in another vehicle as well as the other vehicle, or even pedestrians in the accident. The insurance coverage should take care of legal fees associated with your defense if you’re judged the negligent party in the accident. It can cover claims for bodily injury and property damage as well.
Automobile Physical Damage Insurance
So, what about damages to your vehicle from other events? That’s covered under your Automobile Physical Damage Insurance. This covers damage to your vehicles or vehicles borrowed by you due to motor vehicle accidents, and other issues such as fire, flooding and even hail.
Did you know that certain business operations require some form of pollution liability protection? This type of policy coverage is typically needed by junkyards or garages where vehicles can leak oil and other chemicals into the ground. It’s also useful for any business operations that can negatively impact the environment and where chemical use can cause harm, may need expert cleanup crews, or can contaminate natural resources.
Pollution Liability Insurance covers cleanup costs, property damage, and bodily harm caused by pollution conditions that originate from your property which moves to someone else’s property. It can also be that you created what are considered pollution conditions on another property.
Business Interruption Insurance
One area that almost all businesses should consider is how to maintain solvency if business operations are interrupted. While we have discussed commercial property insurance for replacing your business assets, you may also need to pair that with interruption insurance. This allows you to recover consequential loss of revenue due to the loss of your business contents (once those contents are also insured).
Insurance Needs for a New Business
When you set up a new business, you need to think about what must be covered right away. These insurance solutions are the necessary foundation based on your type of business and where you plan to start. For example, if you don’t have any employee’s as yet, then you won’t need employee liability insurance. The beauty about the insurance industry is that you can plan for your future, and where your business evolves, you can add additional insurance solutions as your business progresses.
Are Small Business Insurance Requirements Different?
More often than not, the insurance requirements of a small business will be the same as for a larger company. But, it all depends on how your business is set up and operated. If you’re a one-person landscaping company, you will need similar types of insurance coverage as does a large landscaping firm. You may not need the same size insurance limits since your project sizes will be different, and if you’re a solopreneur, you won’t need employee liability.
But, all else is fair game since you’re in the same industry.
So, when you are starting a new business, or you want to determine your current and further business insurance needs, look at the type of operations you run. This is one of the main areas that you need to address to ensure that you are looking at options that suit how your business operates.
If you’re still unsure about how to proceed, then let’s talk. We can help you understand the insurance solutions that best suit your business operations and how to find affordable coverage that ensures you are protected the right way.