• The Most Misunderstood Business Insurance Coverages Explained

    The Most Misunderstood Business Insurance Coverages Explained November 20, 2018

    Business insurance can be confusing given all the coverage options. This brief guide to some of the most misunderstood business insurance coverages should help, but talking to your insurance agent is always the best advise.

    What is the difference between Cyber Insurance vs Crime Insurance?

    Crime insurance is intended to protect your company’s loss of tangible assets, like money, securities, or inventory, resulting from theft on your premises or in transit.

    Cyber insurance is intended to protect your company’s loss of intangible assets, like data and documentation, resulting from a data breach. Also included are regulatory fines and penalties expenses, business interruption expenses, notification/public relation expenses, and forensics services. (Currently all 50 states, Washington DC, Puerto Rico, and the Virgin Islands each have mandatory requirements for notification and credit monitoring resulting from a data breach.)

    Data Breach Management Expense
    Legal Liability and Defense Costs
    Regulatory Investigation
    Loss of Income from Network Interruption
    Loss of Information Assets from Security Failure
    Cyber Extortion
    Fraudulent Funds Transfer
    Social Engineering (leading to loss of funds)
    Employee Theft

    Combining crime insurance and cyber insurance means your business is protected from the financial impact of more threats to your business’s success. Brunswick Companies has the ability to evaluate your unique risks and provide both coverages.

    Why do I need Commercial Insurance for a Home-based Business?

    While your homeowners insurance will cover property damage from events like storms, water leaks, and sewer backups, if a customer slips and falls during a meeting, that’s a business-related activity that most homeowners insurance won’t cover.

    Having a business owners policy (BOP) for your home-based business will help make sure you, your family, and your business have the right protection when you have customers in and near your home. Some state laws may even require you to maintain workers compensation, even if you’re a sole proprietor. Also, if your business could pose a financial threat to clients, you should have professional liability insurance to protect you should you make a mistake.

    Why do I need Commercial Umbrella/Excess Liability Insurance?

    The primary purpose of umbrella and excess liability policies is to provide higher liability limits. Since many state legislatures have passed laws modifying or eliminating many of the traditional defenses against claims of negligence, more and more lawsuits are successful and for larger payouts. An umbrella or excess liability policy is designed to provide limits over underlying policies such as general liability or business auto.

    The type of umbrella or excess liability is key to the coverage options, however. Some will offer only the same limits as underlying policies, while others will offer more or less depending on coverage areas. A true umbrella policy will have higher limits in all coverage areas.

    How does Business Interruption Insurance help me?

    If you’re a tenant in a building that suffers a loss forcing you to close or relocate, could your business survive the loss of income and additional expenses? What if your supplier suffers a loss that makes them unable to fulfill your orders? While your property insurance will cover you for a fire or other disaster, it won’t cover a loss of income. Business interruption insurance helps your company when circumstances outside of its control prevent you from operating normally. While each policy is unique, you should make certain yours will pay for fixed costs like utilities, rent, and payroll until your business recovers.

    What is Commercial Management Liability Insurance?

    Commercial management liability insurance covers exposures face by directors, officers, managers, and business entities that arise from governance, finance, benefits, and management activities. It’s sometimes called executive liability insurance in reference to those it protects. Often provided as a package policy, it includes directors and officers (D&O) liability insurance, employment practices liability insurance (EPLI), fiduciary liability insurance, and crime protection insurance.

    • Directors and officers (D&O) liability insurance provides protection when duties are breached or allegedly breached and suits are filed against a director or officer.
    • Employment practices liability insurance (EPLI) provides protection from suits alleging wrongful acts arising from the employment process. The most frequent types of claims covered under such policies include: wrongful termination, discrimination, sexual harassment, and retaliation.
    • Fiduciary liability insurance provides protection to all those acting as benefits plan fiduciaries. This goes above the coverage afforded by ERISA surety bonds and employee benefits liability insurance by covering breaches of fiduciary duty, like imprudent investment and negligent selection of service providers.
    • Crime protection insurance provides coverage for kidnap, ransom, and extortion exposures. Coverage can be further modified to include cyber insurance to make sure all forms of fraud are addressed.

    If I have General Liability Insurance why do I need Professional Liability Insurance?

    The difference is in what they cover:

    • General liability protects against physical injury or property damage arising from your daily operations. An example might be a client tripping and falling on company property and being hospitalized.
    • Professional liability covers financial losses resulting from negligent professional services or advice. An example here might be an accountant failing to file necessary paperwork on time and incurring additional fees for a client.

    Talk to your insurance agent about making sure your business has the right coverages, or call Brunswick Companies at 800-686-8080 to speak to one of our risk specialists today.