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Limited By Your Business Insurance?

Limited By Your Business Insurance?

As a business owner, it is natural for you to always be looking for ways to make a profit. Sometimes these ideas come in the form of new products and services that you can provide to customers. Innovation is important in any industry, but there might be one small hitch in your plans. Does your current insurance policy cover the new service or product? How can you tell? General Liability Policy Hazards On your general liability policy (or your package policy that includes liability) there is usually a page that lays out the hazards and rates. This page includes the following: Class Code. This is a five-digit code number that is assigned to each and every industry component. What your business does will fit into one or more class codes. For example: 91560 – Concrete Construction 97447 – Masonry Some are even more specific, such as restaurants, where classification options include whether alcohol is sold, how much is sold, and whether there is table service. Description. This is a brief description based on the class code number. Rating Basis. This is where your premium amount comes from. Each class code has a basis, which can be area, subcontractor costs, payroll or gross receipts. Rate. This is how the premium is calculated. Insurance companies set rates for class codes and then multiply them by the rating basis to get the premium they will charge. It is a good idea to review this page with your insurance broker to be sure that your business is classified correctly and that all components of your business are accounted for. Sometimes insurance companies will...