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Business Insurance

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Business Insurance

Our mission is to help medium and small businesses manage risk by finding business insurance quotes at a reasonable price.  Below are the most frequently requested policies in Texas.

 

  1. Business Owners Policy
  2. Workers Compensation
  3. Commercial Auto
  4. Commercial Umbrella

 

What is a BOP?

The business owner’s policy is designed for small to medium size businesses and organizations. It provides both commercial property and commercial general liability protection.  Commercial property insurance can be used to cover one or more of the following classes of property.

  • Buildings
  • Business personal property of the policy owner.
  • Personal property of others in the care, custody, or control of the insured.

Commercial property can be insured against various perils.  There are some policy forms that list specific named perils and a more comprehensive “all-risks” form.  A named perils policy covers only those perils specifically listed in the policy.  An all risk policy covers all losses except those that are specifically excluded by the policy. In all cases, these forms can be expanded with endorsements to cover losses that might arise such as an earthquake or the enforcement of ordinances from new laws.

Losses are paid on a replacement cost basis. Losses are subject to a deductible that, depending upon available options, can be selected by the policy owner. The settlement of losses is subject to a coinsurance provision that is often 80 percent but can vary.  To provide protection against a coinsurance penalty, the policy owner has the option to elect an agreed amount of coverage or an inflation guard endorsement that automatically increases coverage limits.

The property forms have several additional coverage’s that include coverage for:

  • Debris removal
  • Business interruption for up to 12 months following a loss, but ordinary payroll is only covered for 60 days
  • Extra expenses for up to 12 months following a loss.
  • Pollutant clean up and removal
  • Up to $1,000 per loss for acceptance of counterfeit money and money orders that are not paid by the issuer
  • Up to $2,500 per loss for forgery and alteration of a check, draft, promissory note, bill of exchange, or similar promise to pay in money
  • Up to $5,000 for increased cost of construction
  • Exterior building glass

For additional premiums, the policy owner can also extend coverage to:

  • Personal property at newly acquired premises, with a $100,000 limit
  • Personal property off premises, with a $5,000 limit
  • Outdoor property, with a $2,500 limit
  • Personal effects, with a $2,500 limit
  • Valuable paper and records, with a $5,000 limit or a higher selected limit
  • Accounts receivable, with a $5,000 limit or a higher selected limit.

Commercial general liability is designed to cover a wide variety of liability loss exposures. These loss exposures include:

  1. Coverage A – Bodily Injury and property damage liability – Coverage A applies to legal liability and defense cost that arise from bodily injury and property damage.
  2. Coverage B – Personal and advertising injury liability
  3. Coverage C – Medical payments – It pays medical expenses for bodily injury to persons injured on premises that the named insured owns or rents.

 

What is Workers Compensation?

An employer faces significant loss exposure for liability that arises from injuries to employees or their deaths. Workers’ compensation laws typically provide four types of benefits:

  1. Medical Care – Benefits for medical expenses are usually provided without any limitations on time or amount.  In addition, they are not subject to a waiting period.
  2. Disability Income – Disability income benefits are payable for both total and partial disabilities. In addition, it does not matter whether a disability is temporary or permanent.
  3. Death Benefits – Most workers’ compensation laws provide two types of death benefits. Burial allowances and cash income payments to survivors. Burial allowances are a flat amount in each state and vary from $300 to $5000.  Cash income payments to survivors are a function of the worker’s average wage prior to the injury resulting in death.

Workers compensation and employers liability insurance contains three insuring agreements.  They are as follows:

  1. Part One – Workers Compensation Insurance – This is an agreement to pay all compensation and benefits required of the insured.
  2. Part Two – Employers Liability Insurance – This protects an employer when it can be sued because of injuries to employees. This may occur for the following reasons:
    1. An injured employee is not covered under a worker’s compensation law.
    2. A spouse or family member sues for loss of services because of an employee’s injury or death
    3. An employee sues the employer in a capacity other than as an employer. For example, an employee injured by a faulty product of the employer may be able to bring suit against the employer as a manufacturer rather than as an employer.
    4. A spouse or family member sues because of bodily injury as a consequence of the injury or death of an employee. For example, a husband may have a heart attack after learning that his wife has been killed by a disgruntled coworker.
    5. The manufacturer of a product that injures one of the employer’s workers can be sued by the worker and in turn sue the employer for improper maintenance of the product. This is referred to as a third-party-over suit
    6. Part Three – Other States Insurance – This part of the policy provides coverage when an employer expands operations to include other states.

 

What is Commercial Auto Insurance?

Commercial auto insurance provides financial protection to the named insured, most other persons driving owned autos, and may include business partners, members of a limited liability company, and employees covering both property and liability. There are three types of commercial automobile policies. They are:

  1. Business Auto Coverage Form
  2. Garage Coverage Form
  3. Motor Carrier Coverage Form

What is a Business Auto Coverage Form?

The Business Auto Coverage (BAC) Form is the most common type of commercial auto insurance and is very similar to the personal auto policy. An insured typically pays insurers a monthly fee, often called an insurance premium.  The insurance premium an insured pays is determined by a variety of factors.  These factors include the type of vehicle, the age and gender of any covered drivers, their driving history, and the location where the vehicle is primarily driven and stored. This coverage includes the following:

  1. Part A – Liability protection
  2. Part B – Medical payments coverage
  3. Part C – Uninsured Motorist Coverage
  4. Part D – Coverage for damage to your auto

 

  1. Liability Protection

    Liability under the BAC form is a single limit of insurance that applies to all bodily injury, property damage, and covered pollution costs or expenses that arise from a single accident, and there is no aggregate annual limit.  Defense costs are paid in addition to this limit. Split liability limits can be added by endorsement.

  2. Medical Payments Coverage

    Part B of the BAC provides payment for the reasonable and necessary medical expenses of an insured as a result of an automobile accident.  Benefits are paid regardless of fault.  The benefits limit, typically in the range of $1,000 to $10,000 is selected by the policy owner and applies separately to each person insured in an accident.  The insured’s under part B include the named insured, business partners, members of a limited liability company, and employees while occupying either a motor vehicle designed for use on public roads or a trailer or when struck as a pedestrian by such a vehicle or trailer. Any other person who in injured while occupying a covered auto is also insured.

  3. Uninsured Motorist Coverage

    Part C of the BAC provides uninsured motorists coverage.  Under part C, the insurer agrees to pay compensatory damages that an insured is legally entitled to recover from the owner or operator of an uninsured motor vehicle because of bodily injury and property damage sustained by an insured and caused by an accident.  The coverage applies to claims for medical expenses, lost wages, and pain and suffering but does not include punitive or exemplary damages.  Many states require a minimum amount of uninsured motorist coverage to meet their state’s financial responsibility law.  In Texas there is no requirement.  A policyholder can purchase an amount of coverage as high as the liability limits that apply under part A.

  4. Coverage For Damages To Your Auto

    Part D is the portion of the BAC that provides coverage for physical damage to the covered auto and to certain other nonowned automobiles.  There are actually two coverage’s: (1) collision and (2) other than collision.  Other than collision is also know as comprehensive coverage.  The policyowner can elect both coverage’s or only comprehensive.  Collision coverage cannot be purchased alone.  Deductibles that can be selected by the policyowner apply to each coverage.  Frequently, a lower deductible is purchased for comprehensive coverage than is purchased for collision coverage.  The reason for this is the significant cost savings by selecting a larger deductible for collision coverage. Collision coverage is defined as the upset of the covered auto or any nonowned auto or their impact with another vehicle or object. Comprehensive coverage is a loss not caused by collision, it must be a result of other than collision.  Together these two coverages give an insured “all-risks” coverage on an insured automobile, subject to the various policy exclusions.  The BAC has a specific list of sources of loss that are considered other than collision.  These are:

    • Missiles and falling objects
    • Fire
    • Theft or larceny
    • Explosion or earthquake
    • Windstorm
    • Hail, water, or flood
    • Malicious mischief or vandalism
    • Riot or civil commotion
    • Contact with a bird or animal
    • Breakage of glass.  However, the policyowner can consider this part of the collision loss if it is caused by collision.

What is a Garage Coverage Form?

The Garage Coverage Form is designed to meet the special needs of businesses engaged in selling, servicing, storing, or parking vehicles.

What is a Motor Carrier Coverage Form?

The Motor Carrier Coverage Form is designed for businesses that provide transportation by vehicles in the furtherance of commercial enterprise.  These include common carriers, contract carriers, and private carriers who transport their own property.  For example, if a rancher owns his own truck and takes his cattle to market but returns with goods of others, he should have his insurance coverage written under the MCCF form.

What is a Commercial Umbrella?

The commercial umbrella policy is designed primarily to provide liability coverage for catastrophic legal claims or judgments. Policy limits are selected by the insured, and can be many millions of dollars. Most policies now have an aggregate limit that applies for the policy period.  Defense costs can be included in the policy limit or in addition to it.

It is important to look at several carriers when shopping for an umbrella because of differences in required underlying limits, insuring agreements, policy limits, events that trigger coverage, exclusions, and coverage territory. In order to acquire an umbrella policy an insured must meet minimum underlying limits on their business insurance.  The following are typical examples:

  • Commercial General Liability
    • $1 million each occurrence
    • $2 million general aggregate
    • $2 million completed operations aggregate
  • Business Auto Liability
    • $1 million single limit
  • Employer’s Liability
    • $100,000 bodily injury each accident
    • $100,000 bodily injury by disease each employee
    • $500,000 disease aggregate

While commercial umbrella policies provide broader coverage than the underlying policies, they can contain exclusions. In some cases, the exclusions are like those in the underlying policies, such as intentional injury and damage to the insured’s product and work. However, the exclusions in an umbrella policy can be more restrictive. For example, it is not unusual to see an exclusion for punitive damages even though they may be covered by the underlying policies.

Most umbrella policies provide worldwide coverage.  However, some policies require that suits be brought in the United States, its territories or possessions, or Canada.

Contact us at Melliand Insurance to help custom a policy for your specific needs.

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