If you want to cover most aspects of your business, the 3 most common liability insurance coverages to purchase would be commercial general liability, workers compensation and automobile liability coverage. This should cover most of your business exposures that aren’t property-related.
1. Commercial General Liability (CGL)
This is the most common insurance coverage you can buy for your business. This covers not only your premises such as your store, warehouse or office, but also what you do …to an extent. Professional liability will pick up what the CGL doesn’t.
CGL usually consists of 5 main limits:
- The general aggregate. This is the most that the insurer will pay under the policy for claims occurring during the policy period.
- The products/completed operations limit. This is the most that the insurer will pay for injuries or property damage occurring off-premises as a result of your products or completed operations.
- The personal or advertising injury limit. This is the limit that will be paid per claim or occurrence for personal injury or advertising injury to other persons. Payout is subject to the general aggregate limit
- The per occurrence limit. This is the limit that the insurer will pay out for all claims of bodily injury, property damage or medical expenses in one occurrence. This is also subject to the general aggregate limit.
- The damage to rented premises limit. This coverage is usually limited to a short term rental of another premises (7 days or less) and covers property damage (to rented building and contents) damaged by fire. Exclusions may apply, so check with your agent for more details.
- The medical expenses limit. This limit applies to payments made for medical expenses due to bodily injury (non-employee) without regard to fault. The limit is per person and is erodes both the per occurrence and general aggregate limits of insurance.
There are exclusions to these coverages, but those vary by type of business and should be discussed with your agent. Where coverage is excluded a supplemental policy may be available for purchase, such as a professional or products liability policy.
2. Workers Compensation
Workers Compensation coverage is required for most businesses by state and federal law. Workers Compensation coverage is designed to cover the following::
- Job-related injury (even if the employee is off-premises or off the clock as long as what they are doing is considered “in the course of employment”)
- Occupational illness, meaning an illness that is unique to the occupation. However, the risk of the disease must be greater to the occupation than to the public at large.
There are two main parts to Workers Compensation coverage:
Part 1: Workers Compensation Insurance. This is the medical and benefits portion of the coverage that applies to the injured employee. Benefits include payments for medical, disability (partial or total, whether temporary or permanent), rehabilitation or death. Workers compensation is no fault coverage, which means that it pays no matter if the employer or employee causes the accident, though the injury cannot be willful. There is no limit to the payout or length of time that medical expenses are covered unless and until the injured employee is released from treatment.
Part 2: Employers Liability Coverage. This is the portion of the coverage that protects you, the employer, from legal claims levied against you due to employee illness or injury. It protects against third party claims from the employee’s spouse, an equipment manufacturer or even the injured employee. The limits contained herein do not apply to a medical payout to the injured employee, they apply to liability coverage on behalf of the employer. The higher limits you purchase, the more protection you have.
One of the most commonly asked questions is if a company owner should include or exclude themselves from coverage under the Workers Compensation policy. The recommendation is that that employers should always include themselves in the policy, even if they have health insurance. An on-the-job injury may be excluded from health insurance coverage.
3. Automobile Liability for Businesses
Auto Liability insurance is a must have for any business, even if your company doesn’t own any vehicles. Why? If you or your employees are using their own vehicles for company business, an accident in the course of business could be excluded from the personal auto policy.
Here are the types of auto coverage you should be looking for:
Automobile liability coverage. This is liability coverage on company-owned autos that protects your company in the event of an accident occurring during the course of business. This portion of the policy pays out to others in an at-fault accident.
Physical damage coverage. This coverage includes comprehensive and collision coverage on company-owned autos. Payment is made to you for vehicle repair or replacement in the event of an accident, subject to the deductible.
Uninsured or Underinsured Motorist coverage. This coverage provides insurance to your company should your company-owned vehicle be involved in an accident with a motorist who is either uninsured or does not carry adequate insurance coverage to pay your claim on their behalf.
Hired and/or Non-Owned Auto coverage. This endorsement provides liability coverage on your behalf for non-owned vehicles such as rentals, hired cars or employee vehicles used in the course of business. This can be purchased as stand-alone coverage if your company does not own vehicles, but it is typically added as an endorsement to the CGL policy for a flat premium.
Other endorsements include rental reimbursement, towing and labor, hired auto physical damage, auto loan or lease gap coverage, new vehicle replacement cost, medical payments or personal injury protection, and even roadside assistance.
Your Hayes Insurance representative can provide more information on these coverages specific to your business. Call or email today for more information and applications.