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Top 5 things to know about your business insurance

The right coverage is key to your company's success

It helps protect your profits by shielding you from sudden, catastrophic expenses, such as a natural disaster or a major lawsuit.

Here are the top five things you should know about business insurance:

1. WHAT IS A BUSINESS OWNER’S POLICY?

A business owner’s policy, or “BOP,” is insurance coverage designed specifically for small or medium-sized businesses. A BOP combines several types of insurance coverage in a packaged format and can be customized to suit a particular business.

2. HOW DOES BUSINESS INSURANCE WORK?

Business insurance is a contract between an insurance company and a business. The insurance company agrees to share the risk with the business entity in exchange for premium payments.

In the event of a covered loss, the insurance company pays for financial losses the business incurs up to the policy limit after the business pays the deductible amount. At the time of a loss, the business will file a claim, and an adjuster will assess the damage and process the claim settlement based on the terms of the policy contract.

3. DOES INSURANCE COVER LAWSUITS BROUGHT AGAINST YOUR BUSINESS?

Business insurance will cover legal expenses from a lawsuit up to your liability insurance policy limit. To be sure that enough liability coverage is in place for extreme circumstances (over $1 million in damages), many businesses buy a commercial umbrella liability policy. Certain liability exclusions also may apply, such as if an injury or damage was expected or caused intentionally.

Most policies also have something called a “workmanship” exclusion, and some exclude coverage of punitive damages. So, you may need errors and omissions coverage, which protects you and your business from claims if a client sues for negligent acts, errors or omissions committed during business activities.

4. WHAT TYPES OF BUSINESS INSURANCE DO I NEED?

Each business is different, and depending on your operations, you may be legally obligated to carry certain coverages. Additionally, the following types of business insurance should be considered essential:

  • General liability: Coverage against accidents, injuries and negligence
  • Product liability: Coverage against product defects
  • Professional liability: Covers professionals against malpractice, negligence or errors
  • Commercial property: Covers damage to your business property from events such as fire or a severe storm
  • Business interruption: Protects your business if you can no longer conduct operations because of a loss
  • Home-based business: Covers general and/or professional liability

5. IS BUSINESS INSURANCE TAX DEDUCTIBLE?

Business insurance is tax deductible if the coverage is for the purpose of operating a business, profession or a trade.

Written by Angelyn Treutel Zeringue

Angelyn Treutel Zeringue is President of SouthGroup Insurance Services, a CPA, PWCAM, CBIA and licensed Trusted Choice Insurance Agent. Reach her at www.southgroupgulfcoast.com, (228) 385-1177 or azeringue@southgroup.net.

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