Secure The Success
of Your Company
with Business Insurance
Table of Contents
Introduction ... 1
Business Liability ... 2
Business Property ... 2
Business Personal Property... 2
Workers Compensation ... 2
Group Health/Medical Insurance ... 3
Disability Income/Business Expense ... 3
Key Person Life Insurance ... 4
Buy-Sell Agreement Financing ... 4
Professional Liability ... 4
Commercial Property Package ... 4
Introduction
Running a business can be very stressful. As a business
owner, you are dealing with financing, operations,
suppliers, marketing and much more.
To ensure your long term success, it is critical for any
business to have the right type and amount of insurance
in place. Just like your home, car and health insurance;
you never want to use it, but it will save you at a time you
need it the most.
Unfortunately, many insurance practitioners forget to
speak in English, and this unnecessarily complicates the
basic purpose of insurance: To protect (liability); and to
restore (indemnity). Insurance is meant to protect one
from liability actions, and to indemnify or provide funds to
restore you to your prior position before an event
occurred.
The following pages will provide a brief description of
business insurance plans, their purpose, and how they
protect you, the business owner from everyday and
catastrophic claims.
George Varela, Agent
Business Liability – Commercial General Liability (CGL)
This coverage protects the business from liability claims. Types of claims are: a slip and fall, false advertising (common online complaint), contractual dispute, and defective products. This coverage is required when leasing a space for the business. Usual limits are $1 million per claim. It can often be packaged with business personal property, busi-ness income and other valuable coverages into a Busibusi-ness Owners Policy (BOP) for additional coverage and savings.
Business Property and Business Personal Property (BPP)
Business Property insurance is for buildings you own. It pays for the repair or replacement of the building in event of a loss. This is similar to home insurance. Business Personal Property refers to your business contents. This will replace your furniture, business equipment, supplies and fixtures in case of a loss due to fire, rain, vandalism, theft, etc. Workers Compensation
If you have employees that work for your business, workers compensation insurance is necessary to protect your business. Workers compensation protects the business in event an employee is injured or becomes ill due to a work related incident by paying for the cost of treat-ment and rehabilitation. With the cost of medical treattreat-ment, it is not feasible for a business to pay for a worker’s injuries out of their operating accounts. If an employee is injured on the job and the company does not have workers compensation insurance, the State of California, Department of Industrial Relations will pay the workers claim, investigate the company, and send the bill to the employer for the work related injury or illness. Workers compensation insurance need not be feared. In most cases it is an affordable coverage, and simple steps can be taken to reduce the risk of claims.
Group Health/Medical Insurance
Group Medical Insurance is extremely important for small businesses. At this time, it is the single best way for anyone to obtain health insurance coverage. Group Medical coverage is guaranteed issue; no one can be rejected for existing medical conditions. Group coverage has much bet-ter plan options than individual health coverage. Group medical cover-age has better rates that individual covercover-age, and rates are calculated by the average age of the entire group. It is important for business owners to recognize the value they can provide by offering even a basic health insurance plan for themselves and their employees. Recent tax laws provide up to a 35% tax credit for business owners who offer a group health plan for their workers.
Disability Income/Business Expense
Your income provides you and your family with all of the assets you have, including a home, cars and living expenses. It can be considered your most valuable asset. Disability Income Insurance replaces your income in the event you become too sick or hurt to work. If you are hurt, your bills and expenses do not stop, and this important coverage would help continue to provide for yourself and your family during your recovery. In the event of a qualifying disability, this coverage: provides a monthly benefit to help cover everyday living expenses, such as mortgage pay-ments, insurance premiums, groceries, etc., it cannot be terminated or premiums increased before age 65, additions can be made to cover business overhead and other business expenses while you are unable to work.
Key Person
Key Person Insurance is simply a life insurance policy. It is intended to protect an ongoing business in event the key employee or officer dies suddenly. Many business owners rely on the business operations to pro-vide ongoing income for their family and employees. Key Person insur-ance provides a death benefit to pay for hiring a qualified, experienced person(s) to complete the work of the key employee, and prevent the business from closing down.
Buy-Sell Agreement
A Buy-Sell Agreement is critical to have in place for businesses that have multiple owners. This agreement allows for each owner to buy-out the others share of the business in case they chose to leave the business or they die prematurely. This will allow the remaining owners to operate the business without having outside parties affecting their operation. In event one owner dies, an insurance policy on his/her life, will provide funds to the remaining owner(s) to buy that persons share in the business. This often prevents the break-up of a business from occurring when a spouse or other beneficiaries suddenly become involved in a business.
Professional Liability – Also known as Errors and Omissions (E&O) For professional services providers whose expertise is relied upon by their clients, (ex. Attorneys, CPAs, Engineers, Financial Advisors, Adver-tising, Web Developers, etc.)
Commercial Property Package
Combination of coverages for building owners that includes Liability, Property and Business Income coverage. Can be used for Commercial buildings and Apartment building owners.
George Varela is licensed in Life & Health, Property and Casualty Insurance in California, Nevada, and Arizona. He specializes is customized insurance plans for businesses, families and individuals. When not meeting with clients, George can be found enjoying family time with his wife and three kids.