Once your business is up and running, you might come to the realization that you can’t do it all, and you’ll need more help. Instead of hiring a full-time employee to handle some projects, you might opt to go for an independent contractor, vendor, or other third party. This is a great choice for small business owners, to save money and grow your business. When you go this route, it’s important to understand the downfalls if you don’t properly insure independent contractors you hire.
Insurance Options
If you decide to expand your workforce with independent contractors, you might have to upgrade your commercial insurance. If an independent contractor you hire makes a mistake without insurance, you could end up paying a lot of money.. That’s because the client can sue both you and the contractor for financial damages. With all that said, it is important to be protected in these instances. So you have two options:
Hire an insured contractor: If something goes wrong and you are sued, you can sue the contractor and recoup some of your losses. You can check if they have coverage by reviewing their certificate of liability insurance.
Add your independent contractor to your general liability policy as an additional insured: This means that they are covered by your insurance for the duration of the job. Make sure you have the right commercial insurance policies. This means a policy covering temporary staff and independent contractors for any work they perform for you.
Key Benefits of Independent Contractor Insurance
When working with independent contractors, having the appropriate insurance coverage in place can provide critical protection for your company. Here are some major advantages of ensuring your independent contractors are properly insured:
Financial Protection from Lawsuits. If an independent contractor has an accident or makes, getting them insured protects you from major financial losses. Without appropriate insurance, your company may be held liable for damages, legal fees, and compensation. Independent contractor insurance assures that you are not solely responsible for these charges.
Coverage for Errors and Omissions (E&O). Contractor errors and omissions insurance (E&O) protects against claims based on mistakes, negligence, or inability to deliver services as promised. This coverage protects your company against the financial consequences of contractor errors, protecting you from costly legal fights.
Liability Insurance for Third-Party Injuries and Property Damage. When independent contractors are covered under general liability insurance, it provides protection against third-party claims for bodily injuries and property damage. Whether an accident injures a client or damages their property, general liability insurance covers such instances, reducing your financial exposure. You can add a contractor to your policy as an “additional insured.” That way the policy covers accidents, property damage and physical injuries caused by the contractor
Professionalism and Peace of Mind. Contractors with insurance or who are covered by your policy ensure that both parties are protected, providing you with peace of mind. This not only protects your organization, but also strengthens your reputation as a responsible business owner.
Reduces Potential Gabs in Coverage. With an independent contractor add to your policy, you’ll reduce potential gaps in coverage. Doing so is crucial for safeguarding your company against unforeseen liabilities resulting from contractor errors or mishaps.
Professions Where Independent Contractor Insurance is Crucial
Independent contractor insurance is especially crucial for specialists in high-risk industries. These are jobs where liability, property damage, or errors can result in substantial financial losses. Some occupations where this insurance is particularly important include:
Construction Workers and Contractors. Construction projects involve numerous hazards, including property damage and on-site accidents, making liability coverage vital.
Freelance Designers and Developers. Errors in design or software development may result in financial losses for clients, prompting legal action.
Consultants and Business Advisors. Mistakes or oversights in professional advise can have financial or legal ramifications for clients, making professional liability insurance essential.
Real Estate Agents and Brokers. These specialists handle major financial transactions and may face legal ramifications if problems develop during negotiations or closings.
Photographers and Videographers. Misplaced or damaged equipment, missed photos, or liability during events can result in financial loss, hence insurance is essential for these positions.
Compare Quotes
Considering the cost of court fees, medical expenses, and repairs that might arise from negligence or accidents, having the appropriate insurance coverage is less expensive than risking the financial strain of a large liability claim. To save money, compare free quotes with an EZ agent. We’ll provide you with one agent to walk you through the process and find you the best policy available. To get free instant quotes, simply enter your zip code in the bar above, call us at 855-694-0047. No hassle, no obligation.
More and more Americans are leaving their cubicles to work on their own. Well, why not? You decide how to run your business. You decide when to work. Who is on your team is up to you. Those are some great perks. So it’s not surprising that there are 15 million self-employed professionals in the American workforce right now, and that number could nearly triple in the next two years.
But there are some things you can’t control or plan for in business or in life. What if something goes wrong on the construction site and one of your clients gets hurt? Or what if you get hurt in a freak accident and can’t work anymore? Those
“what if” questions are enough to turn the dream
of a self-employed entrepreneur into a nightmare.
So, if you work for yourself, you need insurance to
protect yourself, your family, and your business.
You’ve worked too hard to leave anything
unprotected. But how do you know which types of
insurance for self-employed people need and
don’t need? Let’slook at types of insurance that
will make you feel safe.
Self-Employed Business Insurance
Whether you’re a plumber or a freelance writer, there’s always a chance of something going wrong with your job. Some people are more likely to get hurt on the job, while others may be more likely to be sued. Insurance for self-employed individuals is crucial to cover the risks of your work. Here are the four most important types of business insurance to look into.
Liability insurance will protect you financially in the event that someone sues you for damages after slipping and falling in your coffee shop. Or breaking an expensive vase while cleaning a client’s home. Slander suits are also covered by general liability insurance. This sort of protection is available both as a separate policy and as part of a business owner’s policy.
Listen, we all have our flaws, and everybody messes up sometimes. This is where professional liability comes in handy. It’s insurance that protects you in the event that a client is harmed as a result of a service you provided or advice you gave. It is also known by its more common name, errors and omissions insurance. Professional liability insurance covers financial losses in the event of injury or damage. While general liability insurance covers injuries and damages to property.
A business owner’s policy (BOP) gives your small business protection against a wide range of claims. It does this by combining two types of coverage. Commercial general liability insurance and Commercial property insurance are both parts of its coverage.
The part of a BOP called “general liability” protects your business in case someone makes a claim against you or your business. General liability insurance protects you from lawsuits if something like a customer slipping on a wet floor. Or a faulty product causing damage to a client’s property. Or a claim that your products or services hurt someone. It can also protect you from libel, slander, and certain advertising lawsuits.
The property part of a BOP helps protect the buildings, equipment, furniture. And stock that you own, rent, or lease for your business. It helps pay to fix or replace things that are stolen, broken, or destroyed, even if they don’t belong to you but were in your care. It can also pay for things like rent, payroll, and other bills while your property is being fixed or replaced after a fire or other covered loss.
If you have employees, no matter the nature of your business, you are required by law to carry workers’ compensation insurance. Workers’ compensation insurance, also known as “workers’ comp,” is a mandatory type of coverage that will provide financial support to your staff if they sustain an injury while performing their job duties. It serves as a disability insurance pool that reimburses workers monetarily and/or provides medical care in the event of an illness or injury. If you want to learn more about the workers’ compensation laws in your state, you can visit the state by state guides on our site.
Physical dangers such as injury and property loss are ever-present in the business world. However, there are dangers associated with using technology that could affect your company. Data leaks and hacking are just two examples. Information about customers’ identities or medical histories that you store on company computers is a prime target for hackers. In order to quickly recover from a data breach or cyberattack, it is crucial that your company be covered by data breach or cyber liability insurance.
If you’re in business for yourself, it’s important to have a basic understanding of health insurance. As a first step, you should enroll in a health insurance plan. If you do not have health insurance this year, you could be fined by the government depending on what state you live in. More importantly, you and your loved ones are taking a serious risk if and when a medical emergency arises.
In addition, if you have been relying on your employer to provide health coverage, you may be in for a rude awakening when you compare prices. Since you no longer have an employer to split the cost of health insurance with, you must do so on your own. The good news is that self-employed professionals can reduce their tax liability. The quickest way is by deducting the money they spend on health insurance premiums.
How To Reduce The Cost Of Self-Employed Health Insurance
A high-deductible health plan (HDHP) is a good option for those looking to save money on health insurance premiums. A higher deductible on your health insurance plan means you’ll have to pay more out of pocket for medical care before your policy kicks in. However, the trade-off is cheaper premiums every month.
Opening a health savings account (HSA) is an option with your high-deductible health plan, making it an even better value. The funds built up in a health savings account (HSA) are exempt from federal income tax, allowing you to save tax-free for future medical expenses. It’s a good idea to consult with an EZ agent, who can explain your options and guide you toward a policy that works for your finances and your loved ones. They will assist you in locating competitive rates and suitable protection.
Self-Employed Disability Insurance
If you’re self-employed and become ill or injured and unable to work, disability insurance could help replace some of your lost income. There are both public and private options for disability insurance. The government provides some options, such as the Social Security Administration and some state programs.
When you’re self-employed, you can buy your own disability insurance policy rather than participating in a potentially more expensive group plan through your employer. You may still be eligible for a group policy through your spouse’s employer or a trade group. You may have more options with an individual policy, but the premiums may be higher. Policy features such as the waiting period, riders, and the definition of disability may be up for negotiation.
Short vs Long Term Disability Insurance
Disability coverage comes in two flavors: long term and short term. Long term disability insurance typically has an elimination period of several weeks to months and a benefit period of several years up until retirement. There may be no waiting period or one as long as two weeks before benefits begin with short term disability insurance. Although long term disability insurance that pays out until retirement age is ideal, a short term policy could be worthwhile as well. In general, shorter waiting periods and longer benefits payout periods tend to come with higher premiums.
For an additional premium, you can secure coverage that the insurance provider can’t revoke for any reason (including your failure to pay premiums) with a noncancelable policy. With guaranteed renewable policies, the insurer cannot cancel your coverage. But they can raise your premiums along with other customers in your rating class. Additional riders, such as cost-of-living adjustments (COLA), residual benefits in the event of a partial disability, premium refunds for going claim-free, premium waivers in the event of a disability, and so on, can be purchased for an additional cost.
EZ Can Help
Working independently or as a freelancer allows for more freedom and a better work-life balance. One disadvantage is that you will be responsible for arranging your own insurance. It’s essential that you do this. Since an accident or emergency can cause financial ruin if you don’t have the proper insurance. As a result, self-employed people who don’t have insurance are taking a risk by not doing so. However, EZ can help! We offer free instant quotes on business insurance for the self-employed and we can even help you find the best plans for you. Enter your zip code in the box below or call one of our licensed agents at (855) 694-0047 to get started.
Almost any time of the year, fires, floods, storms, hurricanes, and many other disasters can cause a lot of damage to homes and businesses. One of the first things a business owner should do to protect their investments from natural disasters is buy business insurance, specifically commercial property insurance. Commercial property insurance is a type of property loss coverage. It protects your business from damage caused by things like bad weather, theft, and vandalism.
This coverage is different from homeowners’ insurance in many ways. Because if a business is ruined and can’t run for a while, there are more expenses to worry about. Since business costs don’t stop if the building is in disarray, a disaster can cause a loss of business in the future. Which can lead to a loss of income while the building is being fixed. Commercial property insurance and the purchase of add-ons to the policy can help cover the costs of repairing the property and keeping the business financially stable in the meantime. But how are the rates for this type of coverage determined?
The Equation
Your underwriter will use all of your data and information you send to plug into an equation to figure out the premium. To start you’ll submit a statement of values (SOV) to your insurance company. A SOV is a thorough list of your assets that your insurance company will use to figure out how much it would cost to replace all of your business’s property and equipment. The total sum of your SOV is now added to your expected business income for the upcoming year. Giving you your total insurable value (TIV).
Your underwriter will then take your TIV and multiply it by your exposure risk rate, which is decided by the rating agency your insurer uses, divided by $100. This sum will give you your premium. Say your TIV is $1,000,000, and your exposure risk rate is $0.4 per every $100. The equation would be $1,000,000 x $0.4/100=$4000 annual premium which is about $333 a month. There are a lot of things that go into getting the numbers to put into the equation though. Things that affect your premium are:
Claims History
The first thing that many insurers look at is how your history of claims compares to that of other businesses in your field that are about the same size. If your business has more or worse claims than others, you’ll have to pay more. However, there is a way to keep your claims at a minimum, or fix the claims history you already have. Accident and injury claims can all be reduced with a good safety program at work and careful risk management, especially when compared to other companies.
Regular safety inspections and a review of safety management to find risks can help you find possible problems so you can fix them before they cause problems. Accident and injury claims can also be cut down by making sure your workers have the proper training on the equipment that they’re working with. If you have a bad claims history and after you implement these safety regulations, you can show your insurer that you have significantly less claims over the course of a year or two. Your insurer will then most likely lower your premium.
Property Construction
Coverage rates can be affected by the materials used to build the business property and by how well it is kept. Buildings made of fireproof materials like brick or stone, or businesses with fireproof walls and doors, will cost less to cover than a building made of wood. This is because a property built with fireproof materials is less risky to cover than one built with wood or other materials that burn more easily. Furthermore, having up-to-date fire sprinklers and alarm systems can also help lower insurance costs. Also, newer buildings and those with recently updated electrical wiring, plumbing, and heating, ventilation, and air conditioning (HVAC) systems often cost less to insure than older properties that need more upkeep.
Industry
Commercial property insurance rates can also be affected by how a building is used. A restaurant or welding business has more risks than a flower shop or a dress store due to the nature of the business, so their insurance rates will be higher. Also, a business’s insurance rates are likely to go up if it shares space with another business that has a lot of possible risks.
Property Location
You know that saying, “location, location, location”? It doesn’t just mean pick a busy area with potential customers, it also means pick a safe area. Your insurance company looks at every possible risk, and we do mean every single one. Any possible risks in the area that your business is located heavily impacts your premium. Risks can include the crime rate, how often natural disasters happen in that area, your proximity to oil plants or businesses that use flammable materials. Location doesn’t just negatively affect your premiums, it can also lower them. Your commercial property insurance can go down if your business is close to places where emergency services are readily available. Such as a fire or police station or even just a fire hydrant. Your business being near emergency personnel means it’s more likely they’ll respond quickly and minimize the damage compared to a business that operates further away.
Coverage
How much coverage you need is the main factor in your premium. To find out how much coverage you need you have to find out how much both the building and anything in it are worth. You don’t want to get a coverage limit that is less than what it would cost to replace all of your equipment or the building. For example, if all together it would cost $1million to replace everything you’d need, at least that much coverage, if not more because when it comes time to actually replace everything, more than likely it will be more expensive than you originally planned.
You should also factor in inflation. So, you’ll want to give yourself some wiggle room just in case. It’s also very important to look over the assets on your statement of values at least once a year. This makes sure that as your business grows and changes, the limits of your insurance will still meet your needs.
How To Lower Your Commercial Property Rates
By following a few important tips business owners can save even more money on their commercial property insurance costs. These can make sure that the business isn’t losing money on insurance costs, while still having sufficient coverage.
Review Your Policy
When a business owner wants to find ways to cut their insurance costs, one of the first things they should do is read their policy carefully. Some people will find that they have more insurance than they need, which means they pay for unnecessary coverage. Changes in the business have sometimes made it so that less coverage is needed. For example, a company may have insurance for tools or a vehicle they no longer have.
Pay Premium In Full
You can choose to pay your commercial property insurance premium entirely, once a year or in monthly installments when you buy the coverage. However, paying the full year in advance is cheaper than paying every month.
Bundle
Companies can bundle their insurance plans to save money, just like many people do with their home and car insurance. A business owners policy, or BOP, is a package of insurance plans that many insurance companies offer to small and medium-sized businesses. Most company owners’ policies include general liability insurance, commercial property insurance, and business interruption insurance at a cheaper price. Any business that buys these three policies individually should think about bundling them to save money.
Raise Your Deductible
A deductible is the amount that the insured has to pay out of their own pocket before the insurance company pays the rest of the claim. Deductibles are chosen when an insurance contract is made. But they only have to be paid when a claim is made. By raising the amount of a deductible, you can lower the amount you have to pay out of pocket.
Policyholders need to look over their policies carefully to see if they can pay a bigger deductible for an accident. When you raise your deductible, your insurance costs go down, but you take on more risk. Fees are often charged each time something happens, not just once a year. Find out what a good deductible for your business is by talking to your insurance agent or provider. Increasing your deductible might not be a good idea if you take on more risk than your business can handle.
Minimize Risks
When giving a quote for a commercial property insurance policy, insurance companies look at a number of things. Such as the amount of risk a business faces. There are several safety precautions a business can take in order to minimize their risk to an insurance company. If a policyholder’s buildings and cars don’t already have a security system, they might want to think about buying one. Businesses can also do things like put sprinklers in your building, work area, or warehouse to lower your risks of fire and possibly lower their insurance rates. Modern fire alarms and smoke monitors should also be put in every business building.
Look For Discounts
Even if your insurance company doesn’t advertise discounts, it doesn’t hurt to ask. Policyholders should always talk to their insurance company to find out if they offer deals or if there are other ways that they can save money. Some insurance companies will give you a discount if you stay with them for a long time. While others will give you a discount if you start a safety program.
How EZ Can Help
Every business is different in terms of what risks it faces, how much its property is worth, and how much coverage it needs. Commercial property insurance prices can change a lot from one company to the next. But businesses can still find ways to lower their insurance costs. The first step to lowering your business property insurance costs is to talk to an experienced insurance agent.
EZ can help whether you need group health insurance for your workers or commercial insurance to protect your business. Our agents work with the best insurance companies in the country to make sure you and your workers get the best insurance. In fact, we can find you the best coverage for your budget and save you hundreds of dollars a year. Feel free to call us at 877-670-3538 if you have any questions or enter your zip code to get started on a quote.
Risk management is the core of commercial insurance. You know you have to protect your business from lawsuits, like if an employee is injured on company property, as well as from disasters such as fire or theft. However, not all damages are physical and not all claims are made by third parties. There are times when you will need errors and omissions (E&O) insurance or employee practices liability (EPLI) coverage. So, let’s examine what these policies cover and where they differ.
E&O Insurance
It’s easy to imagine a construction site requiring liability insurance in the event of an injury, or a supermarket needing a policy to cover a customer who slips and falls in the store. A general commercial liability insurance policy would cover these types of accidents. Product liability insurance would protect against a product’s failure. This is all damage that we typically hear about. However, what about damages that aren’t visible? If your company provides clients with advice or services, you likely need E&O (also known as professional liability). In the past professional liability was for professionals such as doctors or lawyers, whereas E&O was for semi-professionals such as accountants or financial advisors. But now, the terms are used interchangeably. E&O insurance protects you against claims of:
Bad advice
Many clients rely on professionals, such as lawyers and consultants, for sound, practical, and specialized advice. If a client receives advice from a professional and their expectations are not met, the client may sue. A client may file a lawsuit, for instance, if a personal trainer advises their client to do certain workouts or stretches that lead to muscle strains or injuries. Another example, say a hairdresser advises a client to use a certain product for their hair that leaves them with damaged hair or skin problems.
Negligence
When a professional fails to provide the standard level of care they are negligent. A judge may find a doctor negligent if, for instance, he or she fails to review a patient’s chart before prescribing an allergen-containing medication. If a financial advisor disregards all warnings about a company’s financial health and recommends stocks that ultimately fail, they can be sued for negligence.
Slander or libel
If a professional publicly expresses unfavorable or incorrect opinions about their client, they can be sued for slander. False or derogatory written statements are considered libel. Either scenario can lead to a costly lawsuit.
Omissions
An omission is the failure to provide important information that could alter a client’s decisions. For instance, if a real estate agent fails to mention that a home is in a flooding zone or has extensive damage from past problems the new homeowner could sue them for not giving them all of the facts.
Mistakes
Even the most professional people in the world can make mistakes. If a client is harmed or loses money due to an error made by a professional such as an attorney, doctor, accountant etc. They could file a lawsuit even though the error was not intentional.
Cost of E&O
The cost of E&O is determined by a number of variables, including the type of business, its location, and any prior claims you’ve had to pay out. Due to the increased underwriting risk, E&O insurance may be more expensive or have less than favorable terms for a person or business with a lengthy history of litigation issues. On average, E&O insurance can cost between $500 and $1,000 annually per employee.
What It Doesn’t Cover
E&O policies do not cover criminal prosecution and certain non-listed liabilities that may arise in civil court. This includes illegal acts, deliberate wrongdoing, and criminal activity. Typically E&O insurance does not cover bodily injury caused by your business, as this is covered by general liability insurance. E&O insurance also may or may not cover temporary employee’s claims resulting from work performed prior to the policy’s start date, or claims in different jurisdictions. It may also exclude cyber related information leaks, employee injuries, and discrimination claims.
EPLI
All of the above pertains to claims made by clients or customers against your company. However, how do you protect yourself from claims filed by your employees? Employers are protected by EPLI against lawsuits filed by current, former, or even prospective employees. In the same way that you have a duty to keep your customers safe and provide them with the best service, you also have a duty to treat all employees and potential hires fairly. This type of insurance kicks in when allegations are made such as:
Sexual harassment
Discrimination
Wrongful termination
Breach of employment contract
Negligent evaluation
Failure to employ or promote
Wrongful disciplinary actions
Deprivation of career opportunity
Wrongful infliction of emotional distress
Mismanagement of employee benefit plans
Keep in mind, however, that this type of insurance will cover owners, managers, and other employees if a claim is made against them, but will not cover anyone who has intentionally acted illegally.
The cost of EPLI depends on the nature of your business, the number of employees you have, and various risk factors. Such as whether or not your company has been sued in the past for employment practices. The policies will reimburse your business for the costs associated with defending a lawsuit and for any judgements or settlements. Whether your company wins or loses a lawsuit, the policy will cover legal fees. In addition, policies typically exclude coverage for punitive damages and civil or criminal fines. EPLI policies exclude liabilities covered by other insurance policies, such as workers’ compensation.
Preventing Claims
To prevent employee lawsuits, start with educating your managers and employees so that you minimize these problems in the first place. For starters:
Develop effective hiring and screening programs to prevent hiring discrimination.
Post corporate policies throughout the workplace and include them in employee manuals so that everyone is aware of them.
Show employees what to do if they experience sexual harassment or discrimination at the hands of a supervisor.
Make sure that supervisors are aware of the company’s stance on unacceptable behaviors.
Document everything that occurs and the steps taken to prevent and resolve employee conflicts.
What it Won’t Cover
EPLI would not cover claims resulting from intentionally dishonest or criminal conduct such as theft or intentional property destructions. It also does not cover employee illness or work-related injuries as these are covered with workers’ compensation. In addition to intentional or criminal acts, the following situations are typically not covered by EPLI:
Professional errors – If your company makes a professional error you’ll need malpractice or E&O insurance to protect these situations.
Unemployment insurance – Most states have a government agency dedicated to handling unemployment benefits claims, EPLI will not cover these.
Unpaid wages – Typically, failing to pay wages for owed or completed work will not be covered by EPLI policies.
Fines and penalties – EPLI will not cover civil or criminal fines.
Limited EPLI Coverage
In addition, you may find that your EPLI policy provides limited coverage or none at all for certain types of employment practice claims. Below we’ve listed the examples of these situations where coverage is typically limited.
Breach of written employment contract – If any employee alleges that you violated your employment contract, whether the agreement was written or implied (EX: made in conversation) can be important. While most EPLI policies will cover the cost of claims related to implied contacts, written contracts may be handled differently by some policies. Some EPLI policies may cover written contract claims whereas many others will only cover legal defense costs or nothing for them.
Wage and hourly claims – When an employee claims that their employer did not pay them in a timely manner. Since a number of costly and high-profile overtime pay claims have been filed in recent years, most EPLI policies will exclude or specify sub limits for wage and hourly claims because the risk exposure is too great.
Immigration violations – The majority of insurers do not offer EPLI coverage for federal, state, or local immigration-related violations (such as failing to check an employee’s immigration status). If so, it is typically a limited edition (or “endorsement”) to your EPLI policy.
Working With EZ
The world of commercial insurance can be extremely confusing, as it’s filled with a variety of policies that cover a variety of individuals and situations, as well as acronyms for a majority of policies. It’s important to evaluate your needs and get the best protection available. Remember that general commercial liability insurance does not cover everyone and everything, and you may need to supplement your policy with E&O and EPLI coverage.
If you need help making sense of the business insurance alphabet soup, we’re here to help! You will be assigned a personal agent by EZ.Insure, and you will never receive unwanted persistent phone calls. Our agents are highly trained and knowledgeable and will ensure you receive the exact coverage you need. Not to mention, we do all of this for free! To get your free instant quotes enter your zip code into the bar below. Or give one of our agents a call directly at (855) 694-0047.
“Commercial insurance endorsements” is a phrase that insurance companies and brokers frequently use, but few business owners understand what an endorsement is. An insurance endorsement (or rider) amends a commercial insurance policy by adding, removing, or excluding specific categories of coverage. It enables you to tailor your insurance to your specific demands or budget without having to shop for a new or additional policy. For example, if an insurance policy you’re contemplating does not protect a critical risk or person you need it to, you might ask your agent to add an endorsement that does. On the other hand, if a policy provides coverage that you do not want, you can seek an endorsement to have it removed, which could save you money.
How Do Endorsements Work?
Each insurance policy begins with a standardized coverage form, which provides a baseline of coverage and is used in practically every industry and on every policy large and small. The problem with lumping every company together is that not all businesses in the same industry need or want the same levels of protection. Lumping everyone together can cause excessive coverage or lacking coverage across the board. Some businesses may be considerably too dangerous to insure on a conventional basis and a standard policy won’t be able to cover them properly.
This is why we have endorsements, to tailor commercial insurance policies to the specific needs of both the consumer and the insurance company. Endorsements are one of the fundamental building components of insurance. Typical policies include 3 components:
Insuring agreement – This is a list of the risks the policy will protect you from
Exclusions – Lists all of the losses your policy won’t cover
Conditions – These are the terms you agree to meet in order to be covered.
How do endorsements fit into this structure? They can either change the insuredinsuring agreement, removing unnecessary coverage, or negate one or more exclusions, thus restoring coverage to the policy. As a result, your policy will be more closely aligned with your company’s risk exposures and insurance budget.
Adding Coverage
An endorsement can be utilized to extend the policy’s coverage beyond what is standard. Additional coverage may be added in terms of who is covered, what coverage is offered, or how much coverage is provided.
Removing Coverage
Endorsements are not just used to add coverage to a policy; they can also be used to cancel or limit coverage. Coverage can be altered in a number of ways if the agreement between the insured and the insurer changes. An endorsement can be used to remove all coverage or just add an exclusion. Another way to limit coverage is to impose a separate lower insurance limit to a specific type of claim. Coverage can be canceled or limited in any of these instances by using an endorsement that describes the scope of the coverage change.
Administrative Changes
Any changes to the policyholder’s or any other relevant party’s information must be documented in an administrative edit endorsement. Changes in mailing addresses, for example, or changes in name or title, must be reflected in the policy.
Clarifications
Finally, some endorsements involve tweaks that do not affect the policy’s essence. If a clause is misunderstood or misread, an endorsement may be required to clarify and make the language more clear.
Types of Endorsements
An endorsement might be as simple as clarifying a certain concept or coverage, and it can add coverage that is frequently omitted from ordinary policies. Although some endorsements add coverage that was not included in the original liability coverage form, others can remove specific coverage. To start there are 4 categories of endorsements:
Standard Endorsements
The same way that many insurance plans are governed by certain rules and defined terminology, so are endorsements. Organizations such as the American Association of Insurance Services (AAIS) and the Insurance Securities Office (ISO) create templates that insurers can utilize. These organizations’ templates are available to insurers who subscribe to them. These are among the safest and most secure endorsements.
Non-Standard Endorsements
Non-standard endorsements are ones created by the insurer for a specific type of policy holder. This may be done if the specific endorsement is not included in conventional endorsements. Many insurers will write their own endorsement statements utilizing standard endorsements as a basis.
Voluntary Endorsements
An endorsement to a policy can be added freely by the insured or insurer. Because of the nature of the business, voluntary endorsements may be included. If a company sells alcohol, for example, the insured may request that a liquor liability endorsement be added to a general liability policy. An example of an endorsement given by the insurer would be the exclusion of asbestos claims from liability coverage. Policies covering specific sorts of operations may include specific types of endorsements, such as an endorsement for a business’s general liability policy stating that the policy must have a professional liability exclusion.
Mandatory Endorsements
Certain endorsements are required. The Insurance Services Office (ISO), for example, requires endorsements on policies that provide a specific type of coverage. State-mandated endorsements may include additional criteria to safeguard individuals, such as limiting the insurer’s authority to cancel a policy. ISO requires various endorsements, such as requiring all general liability policies to include specific exclusions. For example, an insurance company that operates in numerous states may use one base policy plus a series of endorsements suited to the regulations of each state. A policyholder who moves between two states may need an insurance endorsement to a policy that is carried across state borders.
Common Insurance Endorsements
A business owner may require a variety of endorsements, the most typical of which are:
Additional Insured
Businesses utilize additional insured (AI) endorsements to add a person or entity as an insured to a policy. The person or company added is typically a general contractor working for the named insured. It is frequently requested on a wide range of insurance policies, including professional liability and commercial motor insurance. However, commercial general liability (CGI) is the most popular. This endorsement is requested by the named insured to ensure that the proper organization or individual is held financially liable in the event of a risk occurrence.
Prior Acts
This endorsement covers claims made on incidents that occurred prior to the signing of the liability insurance policy. Certain claims take time, and the insurance company will usually include a retroactive date that is prior to the beginning date of coverage. As an example, consider a doctor who purchases a new malpractice policy with a prior actions endorsement. If a claim is made for an event that occurred before the new policy went into effect, but after the stated retroactive date, it will be covered by the current policy. If an insurance company does not include a retroactive date. These types of endorsements are considered full prior actions coverage. Any claims made during the current policy’s coverage period would be covered.
Extended Reporting Period
A claims-made professional liability coverage can be supplemented with an extended reporting period (ERP). You can file a claim even after the policy has expired. ERPs are classified into two types: basic extended reporting period and supplemental extended reporting period. If an insurance is canceled or not renewed, a basic ERP is frequently offered for a free 30-day or 60-day extension. Supplemental ERPs are acquired from the provider of your insurance and typically extend the coverage for one to five years. Some insurance companies also give indefinite ERPs.
Equipment Breakdown
This type of commercial property insurance endorsement will reimburse you for loss or damage, including equipment repair or replacement as well as time and work, income loss, lost inventory, and other required expenses. The following types of equipment are commonly covered:
Mechanical
Electrical
Computers
Air conditioning or refrigeration systems
Boilers and pressure equipment
Employees as Insureds
If you own a company where your employees drive to help your company, you may be exposed to a considerable level of risk. For instance, suppose you have a post office box and your receptionist goes to retrieve the mail. Unfortunately, some commercial auto insurance policies will not cover your liabilities during this time. If your employee drives for your company, you may be held liable for their activities. If an employee is injured while working for you, you may not be fully protected. Your company auto policy will only cover the vehicle’s use.
Meanwhile, your employee’s coverage will protect them if they use the automobile for personal reasons. When the insurance adjusters begin their investigation, your employee is likely to be caught off guard. You’ll need a staff as insured endorsement to safeguard your staff and yourself. This endorsement will cover your staff even if they own the vehicle. This eliminates the possible gap and can save you and your employees a lot of sorrow and financial hardship.
Fellow Employee Coverage
If one of your employees injures another employee while working for your organization, the person who is at fault will require protection. If your employee causes a car accident that injures another employee, they may have no recourse. This will happen eventually, and when it does, the employee who is found to be at fault may face complete liability. This occurs because most business auto policies do not cover employee injuries. Employee injuries, according to policy issuers, should be covered by other insurance, including workers’ compensation and Employer’s Liability insurance. Employees who are driving a vehicle when they harm another employee may not be protected by their own insurance.
Accounts Receivable
Accounts receivable endorsement can be added to commercial property coverage to protect your small business from financial losses if you are unable to collect money from clients or customers, or if your accounts receivable records are damaged or destroyed as a result of a covered event.
How Much Do Endorsements Cost?
The cost is undoubtedly at the forefront of your attention, as it is with most company products. Here’s an overview on premiums. The cost of additional insured (AI) can range from $100 to $500, depending on the type of AI endorsement. With blanket AI, the insured can add as many AIs as they require, which is frequently close to $500. Individual AIs are normally priced at $100. Limit increases are completely determined by the increasing volume, type of coverage, and level of exposure. Although we’d love to provide more concrete figures, every company is unique. As a result, providing a range without knowing specifics is impossible.
Working With EZ
Your business insurance can protect the company financially and otherwise in the event of a risk. From general liability and commercial property insurance to professional liability coverage, the insurance you choose and the endorsements you add can provide peace of mind for you and your employees. When used correctly, endorsements can be used to tailor your policy to your specific needs. An insurance professional can assist you. Our agents at EZ work with the top insurance providers in the country to locate the best insurance for your company and its employees. In fact, by working with your budget to get you the greatest coverage, we can save you hundreds of dollars per year. If you have any questions about commercial insurance, please contact us at 877-670-3538 or enter your zip code in the bar below to get an online quote now.
Any business can make mistakes, but companies that offer industry specific expert services or consulting are more vulnerable to negligence claims when they make a mistake. If your company gets sued due to a mistake or misleading information, it could hurt both your reputation and your bottom line. Negligence suits are one of the most common and expensive types of claims companies face. Negligence claims fall under two categories, ordinary, and professional. Knowing the difference between the two can help you avoid a costly lawsuit.
Ordinary Negligence
Ordinary negligence is defined as a failure to use ordinary or normal care. It usually refers to a careless error that has caused harm to others. Ordinary negligence can be filed against any business or even individuals. And it is the basis for all personal injury lawsuits. Because they did not follow the duty of care, a person or business could be held accountable for physical or financial harm caused by the negligent mistake. Four things must be proven to establish ordinary negligence:
Duty of Care
The first thing a plaintiff has to prove is that you had a duty of care toward him or her. This usually means that you have a duty to take reasonable care not to hurt the plaintiff. However, states can change this standard of care by law for certain relationships, like a doctor-patient relationship. Usually, a person owes someone else a duty of reasonable care if they can see how their actions could hurt others. For example, a driver owes a duty of care to everyone else on the road by not texting and driving. A store owes a duty of care to their customers by putting a “Wet Floor” sign over a spill. In personal injury claims, duty of care is almost never disputed because it’s just about proving that there was a duty of care owed to the plaintiff, not whether or not it was broken.
Breach
If the client can prove that you had a duty of care to him or her. The next question is whether or not you broke that duty. A breach happens when someone doesn’t act with the same level of care that a normal person would in the same or similar situation. This is where someone needs to prove that you broke the duty of care. Using the examples above for instance, an ideal person wouldn’t speed or drive while drunk. So, a driver who did either of these things would have broken their duty of care to other people on the road. For businesses you wouldn’t ignore a fall hazard, you’d put up a caution sign or rope the area off. If you do ignore it then you’ve broken the duty of care.
Causation
Next, the complainant must prove that your breach caused him or her harm. That is, the harm would not have happened if you had fulfilled your duty of care. Also, the breach must be the direct cause of the injury. This means that the law must agree that the breach is linked enough to the injury to make you legally responsible.
Damages
The last step is for the plaintiff to prove damages. Lawyers and courts say that negligence without damages is “negligence in the air”. For example, a driver who speeds may be guilty of a crime. But if the violation didn’t hurt anyone else, the state can’t hold him or her responsible for negligence. In personal injury cases, plaintiffs often try to get paid for their medical bills, lost wages, property damage, loss of quality of life, and physical and mental pain and suffering. So, say they slipped on the wet floor but had no injury from the fall. While you caused the fall you didn’t cause any injuries that need compensation.
Professional Negligence
Unlike ordinary negligence, the rules for professional negligence usually only apply to businesses that offer specialized skills and services to their customers or clients. When a professional doesn’t do what they should for their customer or client. This can include not doing a job with the right amount of skill and care, giving bad advice, or not acting quickly enough.
Professional negligence can happen in any job. Such as with doctors, lawyers, accountants, engineers, builders, and other people who provide professional services. Professionals are required by law to do their jobs with a certain amount of skill and care. If they don’t, they could be held responsible for any harm that happens to their patients or clients. There are two common types of professional liability:
Breach of fiduciary duty
When you don’t act in the best interests of your client, you break your fiduciary duty. This can include making bad decisions, not giving important information, not telling the client about conflicts of interest. Or pursuing opportunities meant for the company without telling the client, and using insider or non-public information in a stock market transaction.
For a client to make a legal claim for a fiduciary breach, they have to prove three basic things:
There was a fiduciary relationship and responsibility
A breach happened
The breach caused damages to the client
Misrepresentation
Negligent misrepresentation is when you say something that you should have known wasn’t true but didn’t with the intention that your client will rely on it and suffer losses because of it. Some examples of misrepresentation are making false statements or promises in a contract or overstating the value or quality of goods or services. The misrepresentation doesn’t have to be in writing. It can be verbal. It can also mean not telling your client about all of the facts. There are 5 components to prove a misrepresentation claim:
There was an important comment about a certain product. And the comment led the client to sign the contract or make a decision
You knew that the information wasn’t entirely truthful or that you purposefully did not provide all of the facts
You made the statement or gave the advice with the intention that your client would rely on it to make a decision or enter into a contract
The client did in fact rely on that information
It’s not always easy to tell if a comment was a fact or someone’s opinion. And this can be a point of contention in a misrepresentation case. The court will look at how a reasonable person would have understood the information.
How To Avoid Professional Negligence Claims
If you offer the kinds of professional services that often lead to professional negligence claims. It’s important to be proactive and take steps to lower your risk of being sued. Let’s talk about a few of the best practices that could help you significantly reduce the risk of a lawsuit.
Contracts
Whether it’s a new client or an extension of a project you’re already working on, you should always insist on a clearly written contract that explains the nature and the limits of the job. It’s important to include every detail you can about the job. Having a clear contract will lower the risk of a negligence claim because your exact promises or the possibility of certain portions of the contract may not work out are listed.
Expectations
It’s easy to get carried away when you’re trying to get a client by making promises you’re not entirely sure you can keep. Even if you do have every intention of making it happen, there’s always the possibility of things not panning out. This is also a very easy way for a professional negligence claim to come about. Make sure you give your clients realistic expectations when you speak with them about how things will work out. Make sure to warn them about possible negative outcomes as well. This will help you avoid awkward and possibly expensive situations where your client feels they were cheated and should be compensated.
Communicate
It is very important to have clear communication with your client. If you let them know about problems and changes in a timely manner, they will think you are more responsible, even if the news is often bad. Changes that come up quickly and out of the blue may make the client upset and more likely to sue you for professional negligence. Keep in touch with your clients often. Even if you have nothing new to say, let them know that you are still working on their project and are fully committed to it.
Records
Unfortunately, a lot of cases of professional negligence start with “he said, she said” claims. The best way to deal with this is to keep careful records of all the professional services you provide. Email is always better than the phone for making deals and decisions because you can keep track of what was said and what was agreed upon. If you prefer to do business by phone or in person, record your talks with clients. If you don’t want to do that, get an email confirmation of what was agreed upon so you have a copy of what was said.
Learn
Keeping up with the latest changes in your industry will help protect you from professional negligence claims. Also, it’s important to keep up with changes to the way state rules govern duty of care.
How To Protect Your Business
Even when you’ve done everything to avoid a negligence claim, they can still happen to anyone. That’s why it’s important to be proactive and get ahead of possible claims by having a good risk management plan and the right business insurance to protect you. Professional liability insurance, which is also called “errors and omissions” insurance, will cover these kinds of cases. It will protect you financially from accusations of negligence, malpractice, errors, and omissions that could happen while you’re giving your clients professional services.
When a claim of professional negligence is made, your E&O policy will pay for your legal defense, judgements, and settlements up to the limits of the policy. It’s important to know that professional liability insurance is a “claims-made” coverage. This means that the policy had to be in effect when the event that led to the claim happened and when you told the insurer about the claim. Also, it’s important to remember that professional liability plans have things they won’t cover. One of the most common is when a professional does something illegal or hurts a client on purpose.
Call EZ
In general, all of the big insurance companies offer professional liability insurance. If you already have business insurance, talk to your insurance company about the possibility of adding professional liability to your coverage. But working with an insurance agent is your best bet. The agents at EZ are well-trained and work with some of the best companies in the country. We can look at all your policy choices and work with your budget to make sure your business has all the coverage it needs. If you would like to see quotes online simply enter your zip code in the box above. If you would like to speak to an agent now call 877-670-3538 today to talk to get a free quote.
Standard Endorsements
Fellow Employee Coverage
