3 Signs Your Business Has The Right Insurance Coverage

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Setting up your business’s insurance coverage can feel like a daunting task filled with hard to understand insurance jargon that can leave the average person frustrated and confused. Insuring your company shouldn’t be that complicated. This article is here to help breakdown what you need to know about insurance by condensing the information into three parts in order to simplify your understanding of insurance and ensure that you are correctly covered. State Minimum and Required Coverage Level Just like getting your vehicle insured, there are also state minimums with regards to the coverage levels for your business insurance. While each state differs, most mandated coverages are relatively low however are usually required in order to obtain a trade or contractor’s license. That said, what may be required as minimum coverage in your state will most likely be much lower than the industry standard, which should be considered when choosing insurance for your company. The industry standard is the most common coverage level which most general contractors and organizations will request from companies before signing onto a project. For Commercial General Liability, the industry standard is $1 million per claim or occurrence with $2 million in aggregate (also known as the policy period). While it is convenient to purchase just your state’s minimum coverage level in order to obtain your license, you will find it necessary to increase your policy once you start securing jobs. Not only will you have to pay more, but you will also have to do it under considerable pressure from your employer. They can even shut down the Jobsite if your company does not have an adequate insurance plan. Added tip: When it comes to Commercial General Liability, you should also make sure that you know the difference between a “Claims Made Policy” and an “Occurrence Policy” as described below: Claims-Made Policy: The claim must be made during the effective time of the insurance policy in order for it to be valid. The claim also must have occurred during the effective time of the insurance policy. Occurrence Policy: The claim must take place during the policy effective period, but can be reported at any time after, even if the insurance policy has expired. Having the Right Endorsements and Add-Ons Aside from your regular policy, almost every insurance policy offers optional coverages that are not apart of the insurance package, however, they are required to meet the industry standard. These optional coverages can always be added on once a policy is issued, but it can complicate and potentially delay your work. Here are the most common endorsements for a Commercial General Liability Policy: Waiver of Subrogation This is one of the more confusing endorsements for business owners to understand. In the simplest terms, it is an endorsement or policy add on that prevents your insurance carrier from attempting to recover the money paid out in a claim by suing a third party that could be found as negligent. Additional Insured Endorsement This endorsement is used to add someone to an insurance policy who was not originally named. This is usually someone who has a vested interest in the business or operation. Inland Marine This endorsement increases your company’s current coverage level. It can be used to cover tools and materials that are transported and used on job sites. Primary Non-Contributory Endorsement Many people have a hard time understanding this endorsement. It refers to the verbiage used in your policy which lists the order that a claim (or loss) is worked on when it is covered by multiple policies. General cont..