Over the past several weeks, I’ve had discussions and quote requests from 4 small business owners in the Dallas / Fort Worth area. Each of them is living the dream having started and building a successful small business through all of the hard work and long hours it takes to build a successful company. Each of the businesses are in different industries, but what was remarkable is their similarity as it related to their commercial insurance. Their commercial insurance coverage didn’t adequately protect them. Here are two of the stories as examples.
The first call I received was from a small limousine service who’s auto policies were going to expire within 48 hours. His current insurance was with a national carrier that advertises a lot – everyone would know who they are. The big hole in his policy is this company does not write hired and non-hired car insurance; the very type of policy a limousine service requires.
I attempted to engage his assistance in completing the application for a taxi and limousine policy, but he wasn’t interested in taking the time to do so. I don’t know if he renewed his policy or found someone else to help him, but if he simply renewed his policy with the then current carrier, he could potentially be in a position to have a property damage claim denied if one of his drivers is involved in an accident. To make matters worse, if he’s sued by anyone, he literally has no liability coverage – that claim would be denied.
The second call was from a person moving their office to another part of Dallas. He is a printer and the new landlord requires a certain level of general liability insurance before allowing a new tenant to occupy their space. I quoted him a Business Owner’s Policy or BOP which provides general liability coverage as well as coverage on their business personal property – computer equipment, printing equipment, furniture, etc. What it didn’t cover is professional liability. In other words, if he botches a printing job and is sued for it, then he has no protection.
Before writing the general liability policy, we had a very detailed discussion over the fact that the BOP does not provide professional liability coverage. He understood and chose to only meet the terms of the lease requirements. The owner didn’t want to spend the extra money at this time for professional liability coverage. Upon receiving a written acknowledgement of his decision, I wrote the policy, but it concerns me he has a hole in his exposure even though he’s meeting the terms of the lease.
These two examples illustrate it’s possible for a small business to have commercial insurance and either not be protected or be exposed due to an exclusion in their current coverage. I believe it’s important for any small business owner to answer two key questions about their current policy or policies:
- Am I protected for what I do?
- What does my current coverage exclude?
Whether you provide a service, make a product, or serve food and beverages it’s vitally important to be protected for what you do. When it comes to general liability policies some are focused on providing premises only liability similar to the printer’s policy. Other general liability policies do provide coverage for the service you provide or the product you make, but unless you confirm it, you could be at risk and not even know it.
It’s also important to know what your commercial policy excludes. All insurance policies have exclusions written in them. Knowing what they are and whether that impacts you and your business is as important as knowing if you’re protected for what you do. As in the case of the limousine company, the owner was unaware his commercial policy excludes his type of business. He has little likelihood of having any claim covered due to that very big exclusion.
The answers to both of these questions, can be uncovered in a discussion with your commercial insurance agent. Review the policy coverage and confirm whether or not you’re completely covered. If there’s a gap, determine whether or not you need additional coverage or an entirely different kind of commercial insurance policy. Having answered both these questions will help any business owner avoid a nasty and unwanted surprise.
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