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