FAQ

What does a business owners policy cover?

Insurance companies selling business insurance offer policies that combine protection from
all major property and liability risks in one package. (They also sell coverages separately.)
One package purchased by small and mid-sized businesses is the businessowners policy
(BOP). Package policies are created for businesses that generally face the same kind and
degree of risk. Larger companies might purchase a commercial package policy or customize
their policies to meet the special risks they face.

BOPs include:

1. Property insurance for buildings and contents owned by the company — there are two
different forms, standard and special, which provides more comprehensive coverage.

2. Business interruption insurance, which covers the loss of income resulting from a fire or
other catastrophe that disrupts the operation of the business. It can also include the extra
expense of operating out of a temporary location.

3. Liability protection, which covers your company’s legal responsibility for the harm it may
cause to others. This harm is a result of things that you and your employees do or fail to do in
your business operations that may cause bodily injury or property damage due to defective
products, faulty installations and errors in services provided.

BOPs do NOT cover professional liability, auto insurance, workers compensation or health
and disability insurance. You’ll need separate insurance policies to cover professional
services, vehicles and your employees.



Do I need professional liability insurance?

Professionals that operate their own businesses need professional liability insurance in
addition to an in-home business or businessowners policy. This protects them against
financial losses from lawsuits filed against them by their clients.

Professionals are expected to have extensive technical knowledge or training in their
particular area of expertise. They are also expected to perform the services for which they
were hired, according to the standards of conduct in their profession. If they fail to use the
degree of skill expected of them, they can be held responsible in a court of law for any harm
they cause to another person or business. When liability is limited to acts of negligence,
professional liability insurance may be called “errors and omissions” liability.

Professional liability insurance is a specialty coverage. Professional liability coverage is not
provided under homeowners endorsements, in-home business policies or businessowners
policies (BOPs).



Do I need a commercial auto insurance policy?

As a businessowner, you need the same kinds of insurance coverages for the car you use in
your business as you do for a car used for personal travel — liability, collision and
comprehensive, medical payments (known as personal injury protection in some states) and
coverage for uninsured motorists. In fact, many business people use the same vehicle for
both business and pleasure. If the vehicle is owned by the business, make sure the name of
the business appears on the policy as the “principal insured” rather than your name. This will
avoid possible confusion in the event that you need to file a claim or a claim is filed against
you.

Whether you need to buy a business auto insurance policy will depend on the kind of driving
you do. A good insurance agent will ask you many details about how you use vehicles in your
business, who will be driving them and whether employees, if you have them, are likely to
be driving their own cars for your business.

While the major coverages are the same, a business auto policy differs from a personal auto
policy in many technical respects. Ask your insurance agent to explain all the differences and
options.

If you have a personal umbrella liability policy, there’s generally an exclusion for business-
related liability. Make sure you have sufficient auto liability coverage.



Do I need business interruption insurance?

Business interruption insurance can be as vital to your survival as a business as fire
insurance. Most people would never consider opening a business without buying insurance to
cover damage due to fire and windstorms. But too many small businessowners fail to think
about how they would manage if a fire or other disaster damaged their business premises so
that they were temporarily unusable. Business interruption coverage is not sold separately. It
is added to a property insurance policy or included in a package policy.

A business that has to close down completely while the premises are being repaired may lose
out to competitors. A quick resumption of business after a disaster is essential.

1. Business interruption insurance compensates you for lost income if your company has to
vacate the premises due to disaster-related damage that is covered under your property
insurance policy, such as a fire. Business interruption insurance covers the profits you would
have earned, based on your financial records, had the disaster not occurred. The policy also
covers operating expenses, like electricity, that continue even though business activities have
come to a temporary halt.

2. Make sure the policy limits are sufficient to cover your company for more than a few days.
After a major disaster, it can take more time than many people anticipate to get the business
back on track. There is generally a 48-hour waiting period before business interruption
coverage kicks in.

3. The price of the policy is related to the risk of a fire or other disaster damaging your
premises. All other things being equal, the price would probably be higher for a restaurant
than a real estate agency, for example, because of the greater risk of fire. Also, a real estate
agency can more easily operate out of another location.

Extra Expense Insurance

Extra expense insurance reimburses your company for a reasonable sum of money that it
spends, over and above normal operating expenses, to avoid having to shut down during the
restoration period. Usually, extra expenses will be paid if they help to decrease business
interruption costs. In some instances, extra expense insurance alone may provide sufficient
coverage, without the purchase of business interruption insurance.



How do I insure my home business?

If you’re running a business from your home, you may not have enough insurance to protect
your business equipment. A typical homeowners policy provides only $2,500 coverage for
business equipment, which is usually not enough to cover all of your business property. You
may also need coverage for liability and lost income. Insurance companies differ considerably
in the types of business operations they will cover under the various options they offer. So it’
s wise to shop around for coverage options as well as price.

Regardless of the type of policy you choose, if you’re a professional working out of your
home, you probably need professional liability insurance. Some types of in-home businesses,
such as those that make or sell food products or sell home-made personal care products, may
have to buy special policies.

To insure your business, you have three basic choices, depending on the nature of your
business and the insurance company you buy it from.

They are:
Homeowners Policy Endorsement.
You may be able to add a simple endorsement to your existing homeowners policy to double
your standard coverage for business equipment such as computers. For as little as $25 you
can raise the policy limits from $2,500 to $5,000. Some insurance companies will allow you
to increase your coverage up to $10,000 in increments of $2,500.

You can also buy a homeowners liability endorsement. You need liability coverage in case
clients or delivery people get hurt on your premises. They may trip and fall down your front
steps, for example, and sue you for failure to keep the steps in a safe condition.

The homeowners liability endorsement is typically available only to businesses that have few
business-related visitors, such as writers. But some insurers will provide this kind of
endorsement to piano teachers, for example, depending on the number of students. These
endorsements are available in most states.
In-Home Business Policy/Program.
An in-home business policy provides more comprehensive coverage for business equipment
and liability than a homeowners policy endorsement. These policies, which may also be
called in-home business endorsements, vary significantly depending on the insurer.

In addition to protection for your business property, most policies reimburse you for the loss
of important papers and records, accounts receivable and off-site business property. Some
will pay for the income you lose (business interruption) in the event your home is so badly
damaged by a fire or other disaster that it can’t be used for a while. They’ll also pay for the
extra expense of operating out of a temporary location.

Some in-home business policies allow a certain number of full-time employees, generally up
to three. In-home business policies generally include broader liability insurance for higher
amounts of coverage. They may offer protection against lawsuits for injuries caused by the
products or services you offer, for example.

In-home business policies are available from homeowners insurance companies and specialty
insurers that sell stand-alone in-home business policies. This means that you don’t have to
purchase your homeowners insurance from them.
Businessowners Policy (BOP).
Created specifically for small-to-mid-size businesses, this policy is an excellent solution if
your home-based business operates in more than one location. A BOP, like the in-home
business policy, covers business property and equipment, loss of income, extra expense and
liability. However, these coverages are on a much broader scale than the in-home business
policy.

A BOP doesn’t include workers compensation, health or disability insurance. If you have
employees, you’ll need separate policies for these coverages.
Vision One Insurance Services Inc.
License # 0G38868                                                                                        T - 800-557-4119
                                                For All Your Insurance Needs!         F - 949-340-5475