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Frequently Asked Questions

Below are some of our frequently asked questions. If you have any other questions or concerns, please feel free to contact us.

  1. What is property coverage?
  2. What is a business owners policy or a BOP?
  3. Do I need to pay the entire premium up front?
  4. What is business income coverage?
  5. Why does the insurance company ask what type of alarm system I have?
  6. What is liability coverage?
  7. How does an umbrella liability policy work?
  8. What is professional liability insurance?
  9. When do I need to buy workers' compensation insurance?
  10. What does workers' compensation insurance do?
  11. I subcontract work to other contractors, but I have no employees — just my partner (half-owner). Do we need workers' compensation insurance on ourselves?
  12. What is commercial auto insurance?
  13. What type of insurance do we need for our home-based consulting business? My partner and I work at home and we have one employee who works at his house. We have just incorporated. Would we be covered under our homeowners policies?
  14. When should I drop the comprehensive and collision coverage on my old autos?
What is property coverage?
Building and business personal property (also called contents) coverage protects your buildings and equipment, inventory, furniture and fixtures. Some policies include breakdown and business income coverage. 

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What is a business owners policy or a BOP?
A BOP is a package policy for small businesses that do not require extensive individual underwriting. It combines property and liability coverage in one policy and generally includes additional coverages at no additional premium. Most insurance carriers have customized BOPs for particular industries and services.

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Do I need to pay the entire premium up front?
Not usually. Depending on your premium size, most insurance carriers allow different payment plans. The company will bill you directly and give you the payment options at that time. Most are 25 percent down and eight or nine payments, or 12 equal monthly installments.

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What is business income coverage?
In the event of a covered loss, this coverage may reimburse you for the net income that would have been earned if fire or other covered causes of loss had not occurred. Losses due to down time or extra expenses needed to restore operations (such as additional property rental) may be covered.

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Why does the insurance company ask what type of alarm system I have?
Most insurance companies will allow credits to premiums for qualified alarm systems, because alarms can reduce the risk of theft. Ask your alarm provider or company to supply a certificate stating the type of alarm. Send the certificate to your insurance carrier.

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What is liability coverage?
There are many different types of liability to be covered for a business. Business liability may protect you from claims arising from customer bodily or personal injuries. Other liability that could be covered: damage to the property of others, products-completed operations, advertising, premises operations, fire, legal liability and related legal defense costs.

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How does an umbrella liability policy work?
In the event of a catastrophic loss, the umbrella policy provides excess liability limits. Once the underlying limits of the business auto, general liability and employers liability policies are exhausted, the umbrella liability policy would provide further coverage

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What is professional liability insurance?
Otherwise known as malpractice insurance, professional liability insurance protects your business against claims resulting from professional services rendered by you to your clients. This type of insurance covers you and your employees in the event that someone claims you incorrectly performed or failed to perform your professional duties.

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When do I need to buy workers' compensation insurance?
In most states, workers' compensation insurance is required when you have one or more employees.1 Usually, the state penalties for employers who do not purchase workers' compensation are very stiff. A few states do not require employers to carry workers' compensation insurance coverage.

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What does workers' compensation insurance do?
Workers' compensation insurance pays for the rehabilitation, recovery or medical bills of employees' work related injuries, as well as lost time when they are off work due to a work related injury. Workers' compensation insurance is not a substitute for health or medical insurance, since employees are only covered for on-the-job injuries

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I subcontract work to other contractors, but I have no employees — just my partner (half-owner). Do we need workers' compensation insurance on ourselves?
Yes and no. The contractor to which you subcontract is required to have proof of workers' compensation insurance for all workers (including you) in case a claim is submitted. However, your contract for subcontract work and proof of sufficient liability coverage may suffice as a substitute to carrying workers' compensation insurance. The contract should include that you have no employees, you are sole proprietors and that it is a valid sub-contract.

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What is commercial auto insurance?
Insurance for automobiles, trucks and vans used for business purposes falls under commercial auto insurance. If you own a business and use personal vehicles for business purposes, you should consider a commercial auto insurance policy. Many personal auto insurance policies exclude coverage if a vehicle is used mainly for business.

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What type of insurance do we need for our home-based consulting business? My partner and I work at home and we have one employee who works at his house. We have just incorporated. Would we be covered under our homeowners policies?
Business coverage is very limited in the typical homeowners policy. Some homeowners policies have the ability to add business coverage. In most cases, the coverage is not adequate to cover an incorporated business with employees. A business owners policy (BOP) may be better suited for your business. Coverage will include liability for you and your employees, equipment, loss of income, and buildings (i.e., your home office). Since you have one employee, workers' compensation is needed in case of on the job injuries. Since you have a home-based business, the relative cost of a BOP is low.

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When should I drop the comprehensive and collision coverage on my old autos?
If you have an outstanding loan on your auto, most lenders require comprehensive and collision coverage. If you or your business owns the vehicles outright, then the decision should be based upon your financial reserves and the value of the auto. Is the value of the auto close to the premium paid for comprehensive and collision? Do you have liquid funds that could be used to replace the vehicle if destroyed or stolen? Can you buy another vehicle of this type? These are some of the factors to consider.

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