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