NYC Insurance Blog

Business Insurance Terms Every Entrepreneur Should Know and Understand

Purchasing business insurance can be challenging if you do not know or understand certain terms. Basic knowledge and understanding of various insurance terms can help you ask the right questions and shop around for the right policy that will protect your business. Here are six business insurance terms you should know:

Commercial Insurance

Commercial insurance is also known as business insurance. This policy protects you and your business from various risks. Anything can happen, and it is crucial to protect yourself from any financial loss. A commercial insurance policy is a package with different types of insurance policies. The coverage you purchase depends on the type of business, coverage needed, and budget, among other factors. Common types of policies included in a commercial insurance package include:

General liability – provides coverage to a business for property damage, personal injury, or bodily harm caused by products or business operations. The policy also includes coverage for injuries sustained on the business premises.

Commercial auto – provides protection from liability or physical damage for all vehicles you own, hire, lease or use in your business.

Commercial property – the policy covers all the equipment and tools you need in your business in case they are damaged/destroyed.

Professional liability – the policy protects you and your business if there is a professional mistake to the services given to a customer or client, and they sue for financial loss.

Workers' compensation – workers' compensation offers cash benefits and medical care to workers injured or ill at work.

Deductible

Refers to the amount of money you pay for a covered business risk before your insurer starts to pay. It is a form of sharing the risk. How does it work? Suppose your business vehicle was damaged in an accident. An insurance adjuster will assess and investigate the accident and resulting damage to determine how much it will cost to fix the car. If the damage estimate is valued at $5,000 and your commercial auto deductible has a $500 deductible, you need to pay the $500 first, and the insurer pays the remaining $4,500 to have the car fixed.

Name Insured

The name insured is the person or business that appears on the policy declarations page. It is possible to have more than one name insured on an insurance policy. The person listed first is regarded as the primary policyholder.

Typically, the name insured buys the policy and pays the premiums. However, this is not always the case. For example, employers purchase health and disability insurance coverage and pay all or part of the premium. We can help you get a quote today for your Business Owner's Insurance, give us a call today!

Premium

Premium refers to the money you pay the insurer for insurance coverage. Premiums can be paid monthly or annually as a lump sum. It is essential to talk to your insurance provider to determine the best approach. Remember, premiums vary from one coverage and insurer to another. Factors that affect insurance premiums include:

• Potential risk
• Business location
• Number of employees
• Claim history
• Annual income
• Type of business
• Property value
• Type of clients
• Number of business vehicles

Certain companies have a higher potential risk than others. For example, construction companies are considered a higher risk, unlike office corporations, office consultations, or retail businesses.

Additional Insured

Additional insured is a person, business, or organization that enjoys protection from general liability insurance without paying insurance premiums. However, since additional insured are not the primary policyholders, they get limited coverage. For example, their line of work must relate to that of the primary policyholder. Having an insurance broker will help you understand these terms, and make sure you are covered properly!

Employer's Liability Insurance

Employer's liability insurance protects your business if an employee sues work-related illness or injury. Workers' liability insurance is divided into two:

Workers' compensation insurance – pays lost wages and medical bills resulting from work-related injury and illness.

Employer's liability insurance protects the business owner if the business or company is blamed for an employee's illness or injury. The policy covers all legal costs if the employee sues you. Legal costs include hiring a lawyer, court fees, and settlement/judgment.

However, business owners should understand that employer's liability insurance does not cover legal costs arising from wrongful termination, sexual harassment, or discrimination.

Take Away

Business owners are advised to shop around before buying an insurance policy. Remember, there is not one insurance policy that meets all your business needs. Therefore, take your time to get a combination of business insurance plans that can provide the protection you need.Allow us to Quote you Today!

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