| Think of business insurance as the | | | | that there are two types of coverage, |
| copper solder that fuses a plumbing | | | | occurrence coverage and claims-made |
| joint together; if the joint leaks, | | | | coverage. Occurrence coverage is more |
| there can be major ramifications. The | | | | expensive but covers you based on when |
| same holds true with business insurance; | | | | the loss happened, even if it was many |
| if you don't have the coverage that a | | | | years ago. Claims-made coverage only |
| backflow prevention contractor business | | | | covers you while the policy is in force |
| really needs - you'll watch those | | | | and the claim is made. With occurrence |
| profits flow right down the drain. You | | | | coverage, as long as you always have |
| personally cannot control or eliminate | | | | some policy in force, you will not have |
| every potential risk that threatens your | | | | gaps in coverage. With a claims-made |
| livelihood, but business insurance can | | | | policy, it is possible to have gaps when |
| provide the added protection against | | | | you have not coverage in force. |
| these risks ... if you carry the right | | | | Commercial Auto Coverage |
| kinds. | | | | If you use any vehicles in your |
| Choosing the right policy with all of | | | | business, you need commercial auto |
| the appropriate coverages can be a | | | | coverage. Personal auto policies |
| challenge when you are a backflow | | | | generally exclude coverage if the |
| contractor/technician. Bob Smart, | | | | vehicle is used in business; be sure to |
| commercial lines director of Compass | | | | read your policy or ask your agent. |
| Insurance in Highlands Ranch, Colorado, | | | | Otherwise, vehicles used in business |
| states: "Everybody wants to lump each | | | | need business auto coverage. The good |
| backflow contractor/tester/tech into the | | | | news is that commercial auto coverage is |
| plumbing category, when in fact they are | | | | usually very competitive and can even be |
| not all plumbers; that was my point of | | | | cheaper in some cases than personal auto |
| contention with the insurance carriers. | | | | coverage. As is the case with General |
| I explained to Hartford [insurance | | | | Liability, you should purchase at least |
| carrier] that the backflow techs test | | | | $1 million in limits. |
| the backflow apparatus - then they make | | | | Worker's Compensation |
| a report on the valve they tested or | | | | If you are a backflow contractor that |
| they repair or replace the valve. They | | | | employs other backflow techs in your |
| are not going in and tearing out water | | | | business, Worker's Compensation is |
| lines or sewer lines. | | | | insurance you will want to carry. It is |
| "What Hartford did…was to cover these | | | | surprising that this is often the most |
| backflow techs under an engineering | | | | misunderstood business insurance |
| class because it's obviously more about | | | | coverage since it covers exactly what it |
| reports and paperwork," he continues. "I | | | | says. This coverage reimburses workers |
| had over 30 backflow techs insured | | | | who are injured on the job for lost |
| through Hartford under this engineering | | | | wages, medical and rehabilitation costs. |
| class and never had one claim." Hartford | | | | It is required by law in virtually every |
| has since modified this particular class | | | | state. Generally, there are two aspects |
| of coverage with regards to backflow | | | | of this coverage: the first covers the |
| techs and currently does not cover | | | | lost wages and medical costs of the |
| backflow techs that work on fire lines, | | | | injured employee; the second covers the |
| i.e., sprinkler systems, suppression | | | | employer's liability should the injured |
| systems; supplementary coverage is | | | | employee or his family decide to sue. In |
| required or a different class should be | | | | most states the worker's compensation |
| selected. | | | | system is the sole remedy for an injured |
| Find an agent who understands your | | | | worker. As a small business owner you |
| business. | | | | will likely have the option of excluding |
| A key component in selecting insurance | | | | yourself from worker's compensation |
| coverage for a backflow contractor | | | | coverage in exchange for a reduction in |
| technician/tester is to make sure that | | | | your premium. Weigh this option |
| your agent fully understands what it is | | | | carefully in light of your personal |
| that you do and don't do in the course | | | | medical insurance, which may have an |
| of your work day. "If one agent wants to | | | | exclusion for job-related injuries. |
| place you in the plumber class - which | | | | Business Interruption Insurance |
| can cost upwards of five times the | | | | Additionally there is insurance business |
| annual premium of let's say an engineer | | | | owners may also want to purchase to |
| class - find an agent who is willing to | | | | protect their businesses from incurring |
| listen and really understand your | | | | the kinds of losses that can close their |
| business, " says Smart. "If all you do | | | | doors: Hurricane Katrina is just one |
| is test backflow apparatus, then you | | | | example of an unforeseen natural |
| shouldn't be placed in a plumber class." | | | | disaster that could force you to suspend |
| Regrettably, insuring your business is | | | | your business operations; floods, |
| not as simple as insuring your car. | | | | tornadoes, and wild fires are other |
| Because this business is unique, you'll | | | | examples. Or, on a more commonplace |
| need to draft a package of insurance | | | | level, your business could be the victim |
| that meets your business needs and | | | | of vandalism or theft. Business |
| provides the level of protection you're | | | | Interruption insurance protects you from |
| comfortable with. | | | | the loss of revenue incurred when you're |
| Your first decision is to decide which | | | | forced to close down. It usually has an |
| types of insurance your business needs. | | | | interesting deductible based on the |
| Two types that all businesses need are | | | | number of days you are out of business |
| property and liability insurance. | | | | rather than a dollar amount and will |
| Property and Casualty Coverage | | | | generally only kick in after your |
| Property insurance protects the assets | | | | business has been down X number of days. |
| your business owns, including the | | | | The premium for this coverage will be |
| building and equipment, from destruction | | | | based on your business income and |
| or damage. Even if you run your business | | | | reimbursement will be made according to |
| out of your home, you'll need to protect | | | | your average of income. |
| your business assets with separate | | | | Umbrella Insurance |
| property insurance; your homeowner's | | | | Is it actually possible for you to buy |
| policy will not cover business | | | | an insurance policy that can save you |
| equipment. There are two general types | | | | money on other insurance policies? It is |
| of property and casualty coverage: All | | | | and an umbrella policy is a great |
| Risk Coverage and Named Perils Coverage. | | | | example. An umbrella policy is a type of |
| As the names imply, "All Risk" will | | | | liability coverage that protects you if |
| cover you for almost any type of loss | | | | there is a judgment against you that is |
| whereas "named peril" coverage will only | | | | larger than your limits of coverage in |
| cover you for specific named causes of | | | | your General Liability or Commercial |
| loss, such as fire. You need all perils | | | | Auto policy. The good news is that since |
| coverage. Even with so called all peril | | | | the umbrella policy is secondary, the |
| coverage there will be exclusions. Make | | | | premium can be very inexpensive. What is |
| sure and review the exclusions in the | | | | even better, it may be possible for you |
| policy. If there are exclusions in the | | | | to lower your limits on your General |
| policy that are important to you, you | | | | Liability or auto policy to something |
| may want to try another insurance | | | | less than $1 million, purchase a $2 to |
| company or purchase specific coverage | | | | $3 million umbrella policy and save |
| for the excluded situations. | | | | money overall. |
| Property insurance is also written as | | | | Disability Insurance |
| either replacement cost or actual cash | | | | Since you're a business owner, you |
| value. The first will cover the actual | | | | should also carry some kind of |
| cost necessary to replace the lost | | | | disability insurance. There are various |
| property (less the deductible). The | | | | kinds of disability insurance available |
| actual cash value policy will only pay | | | | that are tailored to the needs of |
| you the depreciated value of the | | | | business owners. All of them involve |
| property -- almost never enough to | | | | paying premiums now to cover your lost |
| replace what you have lost. Unless the | | | | income if you become disabled or unable |
| cost is prohibitive, you should purchase | | | | to carry on your business. If your |
| replacement cost coverage. Even with | | | | business is dependent upon the expertise |
| replacement cost coverage you will need | | | | or knowledge of particular people in |
| to make sure you have purchased a high | | | | your company, you should also consider |
| enough limit. If your building and | | | | key person insurance. This type of plan |
| contents are worth $1.5 million and you | | | | helps to compensate a business for |
| only have $1 million in insurance, a | | | | financial losses due to the death or |
| total loss would still leave you $500 | | | | long term disability of a key person. |
| thousand in the hole. | | | | The insurance provides additional funds |
| To determine how much property insurance | | | | to the business until the key person can |
| you'll need, create an itemized list of | | | | be replaced, or until he or she returns |
| your business' assets and their | | | | to work. |
| individual dollar values. Then decide | | | | Business Owner's Policy |
| which assets you actually want to insure | | | | Properly covering your business is a |
| and for what value, which will determine | | | | complex task, involving multiple |
| the insurance premium. In some cases, | | | | policies each of which has its own |
| you may decide against insuring a | | | | limits and exclusions. Many small |
| particular asset, because it just | | | | business owners can satisfy many of |
| doesn't warrant the cost of the premium. | | | | these through a package policy known as |
| In other cases, the premium may be well | | | | a Business Owner's Policy or BOP. Often |
| worth paying. | | | | the BOP policy is priced very |
| General Liability | | | | competitively and allows some level of |
| Liability insurance is the other kind of | | | | customization through purchasing of |
| insurance no business should be without. | | | | additional limits and coverages. It is |
| General liability is just that -- very | | | | only available for businesses up to a |
| general in nature and protects your | | | | certain size - ideal for a small |
| business from liability arising from | | | | backflow contractor -- and varies from |
| negligence on your part that may cause | | | | carrier to carrier. You should ask your |
| injury to others, such as a customer or | | | | agent. |
| employee. It also protects your company | | | | Reading an insurance policy contract can |
| if someone is injured as a result of | | | | be a daunting task. Their structure can |
| using your service. When you consider | | | | be very confusing and they are loaded |
| that the legal expenses, settlement or | | | | with special definitions. Despite this, |
| judgment expenses of a single lawsuit | | | | it is critical that you understand your |
| could drive your business into | | | | coverages; your agent can help. However, |
| bankruptcy, you'll see why this kind of | | | | when all is said and done, just like |
| insurance is considered a "must-have". | | | | everything else in your business, the |
| Also check whether or not your general | | | | final responsibility rests with you, the |
| liability insurance policy also covers | | | | owner. |
| product liability for the valves you may | | | | Being a successful business person means |
| be replacing. If not, you'll want to add | | | | being able to anticipate events and plan |
| this type of specific liability | | | | for the future. Business insurance is |
| insurance to your package. You should | | | | one way of ensuring that you're in |
| include "Errors and Omissions" coverage | | | | control of your future rather than being |
| which protects you in the event you are | | | | controlled by it. Unfortunately, there |
| sued as a result of a mistake in your | | | | is no generic plan that will meet every |
| work. | | | | small business person's needs. You'll |
| What limits of General Liability should | | | | need to shop around, just as you would |
| you purchase? According to the Insurance | | | | for any product, to get the business |
| Industry at-large, the absolute minimum | | | | insurance that's most suited to you as a |
| in this day and age should be $1 | | | | backflow contractor. |
| million; most businesses should consider | | | | Disclaimer |
| increasing this to $2 or $3 million. The | | | | This article is intended to provide |
| good news is that insurance is not | | | | general information on commercial |
| priced on a straight line basis. Since | | | | insurance for educational purposes only. |
| smaller claims are much more likely than | | | | The material here is not intended to |
| large ones, the first $1 million in | | | | provide specific recommendations for any |
| coverage will cost the most; an | | | | individual business or type of business. |
| additional $1 to $2 million will not | | | | Insurance is regulated in each state by |
| cost double or triple the amount. | | | | that state's Department of Insurance. |
| Different types of liability coverage | | | | Only a licensed Insurance Agent or |
| have developed over the years do address | | | | Insurance Broker in your state is |
| specific business needs. When buying a | | | | qualified to provide you with advice on |
| liability policy, you should be aware | | | | your specific business insurance needs. |