Business Insurance

Hey, good morning, you. It is Thursday at 10 am – you know what time it is. That means it's Coffee Chats with Candice. So, grab your cup of coffee. I've got my Ember cup with my black rifle coffee. Grab a cup of coffee or beverage of your choice, no judgment here, and that includes your business.

Let's chat insurance, business insurance specifically. I know,  but it's something we need to talk about because it's needed and most people are underinsured. They don't realize what they need because they don't have someone to tell them or to let them know. 

For those of you who don't know me, my name is Candice Montgomery. I'm the founder of “Beginner's Guide to Budgeting” and “Monetize your Dream” – a course to master business basics. I help new and aspiring women entrepreneurs master business basics, so they can achieve personal and financial freedom. So think, Business 101, Things you don't know – that's what I teach. If you're new to me, I own three businesses. The first one, my husband and I started in 1996, and now it's in its 27th year. We've paid off over $450,000 in seven years, and since 2022, we have been completely debt-free in our personal and our business lives. I'm passionate about business and budgeting and sharing that with you.

In this video, I'm going to briefly explain: General Liability Property, Commercial Auto, Umbrella, Product Liability, Business Interruption, Workers Comp, Employment Practices, Liability, Fidelity Bonds, Professional Liability and Cyber Liability.

Did you ever think you would need so many insurance policies? I didn't think so. And some of them I was like, “Huh. I’ve not heard of that” “Doesn't necessarily apply to me.” 

General Liability is the very basic policy that businesses need to protect themselves against claims of bodily injury, property damage, and advertising injury. General Liability can also cover legal expenses and settlements going on.

Property Insurance covers your business property including your buildings, equipment, inventory, and other physical assets in the case of damage due to loss like events of a fire, theft, or natural disasters. This is for property that you own, not that you rent. For example, we own the building for our business, so we would have property insurance to cover that. If we were renting, we would not have property insurance, we would have renter's insurance, and it would cover the things that we had inside. You can purchase general liability and property separately, or you can get what's called an “owner's policy” or a “BOP”, business owners policy. It bundles general liability and property into one package, And it's often more affordable than purchasing the policies separately. It's designed for small to mid-size businesses.

Commercial Auto. If you're going to be using your vehicle and your business, you need this. This would cover you in case of any accidents, injuries, or property damage involving your company-owned vehicles. If you have employees, they also have to be on your policy as well. If your employees have a bad driving record, that is going to affect your policy rate, and you may consider not having them on your policy or as drivers in your company if that liability is too great because it can increase your policy. The amount you have to pay either by month, every six months, or annually. So, something to consider.

Umbrella policy. So, an umbrella policy, it just covers everything. It is for coverage against liabilities that go beyond the limits of your other policies, especially if you have a business that may face large liability claims. For example, we have general liability as a $5 million policy. Well, if we happen to be working in a $10 million home, then as long as we had a $5 million umbrella policy, it would cover the balance if $10 million was the total claim. So, very helpful to have. 

Product liability. That's for businesses that manufacture, distribute, and sell products. It protects against claims related to injury or damage caused by a defective product. You might consider this policy if you're a small business, and you're creating products at home, like bath salts, lotions, etc. This would be a great addition to protect your business. I see a lot of small businesses, and spray tanning artists, creating their own powders, lotions, and stuff like that. And I honestly doubt that they have thought about the fact that they need product liability insurance because they're creating something that hasn't been tested, or approved, you know, so they're just creating something with products that are over the counter or being sold as wholesale. And creating something that may cause a reaction or something far worse than that with the products. When you mix something that's not packaged the way it is labeled package it for purchase. Like if you purchase product A and you purchase product B they're fine on their own, but if the person mixes them, that may not be fine. So, that's where you would need something like that. So, definitely check it out if you're making things at home that are going to be on people's bodies or in their bodies or anything like that. So, just as I mentioned, General Liability Property, Commercial Auto, Umbrella, and Product Liability are some of the most commonly needed for business.

The ones I’m going to talk about now, are in addition to, or if you have employees, or if you offer a professional service, probably not anybody I'm speaking to, but just in case. 

So, a Business Interruption policy would be a great policy when your business is unable to operate due to a covered loss, like a fire. The policy can help replace the lost income and cover ongoing expenses like rent and payroll, so your business can keep running and you don't have to worry about where you're going to get the money from to operate your business because all of your stuff is gone, and you're having to replace things. 

Workers' compensation or “Workers Comp” for short is mandatory in many places. This policy provides medical and wage benefits to employees who are injured on the job. It also protects businesses from employee lawsuits related to workplace injuries. So, very important, if you have employees you need to have it. Check your state but in the state of Texas as you need to have it. So if you're going to have employees, you need to have it. If you're not going to have employees, or if you're not planning to hire anyone right now, or in the near future for your business, it's not necessary. So Workers Comp applies to the employees only and excludes any subcontractors, or freelancers because they're not employees of your business. So, If you're Incorporated, an LLC, or anything other than a sole proprietorship, because, as you know, its apprenticeship is only you in your business, you can request to be excluded as an owner on the policy if you don't want to be covered. So for example, on our workers comp for our HVAC business, I am not covered as a principal owner, because I'm not going to sue myself if I hurt myself at work if that makes sense. It would cover wages or whatever. And so we would have like short-term disability, which I don't even get into at all (today) so short-term or long-term disability. But anyway, you need to know, you need to understand what removing yourself from coverage does in the event of an accident at your workplace. So most, if not all insurance companies will require that you have 24-hour coverage. Health insurance is 24-hour coverage. So, when you're being excluded, they will require that you have some kind of insurance or that they will put you on there they'll require you to be on.

Employment Practices Liability or E.P.L.I. This policy protects against employee-related claims such as wrongful termination, discrimination, sexual harassment, or other employee-related issues. 

Okay, a Fidelity Bond. This protects your business from employee theft and dishonesty. These policies are typically used with businesses with employees who handle money, or valuable assets. I'm thinking of pizza delivery people or a courier service; if you have a courier service and they handle money. Those are the policies that have to do with employees in the next few policies that may or may not apply to you to your business.

Professional Liability, also known as errors and omissions, or, you know, this is for businesses that provide professional services. It covers legal costs in case clients claim financial losses due to mistakes, negligence, or inadequate service. For example, an architect, accountant,  a lawyer, or if you're old enough, Enron and that stuff, the Ponzi schemes, that kind of stuff.

The last one is Cyber Liability. And this one, you wouldn't think that you would need it. But in our digital age, protecting against data breaches and cyber attacks is crucial, because they're happening all the time. Cyber Liability helps cover the cost of data breaches, including notifying affected parties, legal expenses, and restoring compromised data. If you have to hire somebody, you have a large amount of clients, and you have that information, and you need to hire somebody to notify the affected parties that can take time, or if you need to take time away from one of your employees to put them on this duty of affecting legal parties, that makes a big difference, because it's going to take away time for your other work that they're doing.

The type of insurance your business might need will depend partly on the size, your industry, your location, and the risks that your business poses. It's essential to work with an insurance professional to tailor your coverage to your business's unique needs. What I'm telling you here are all things that are recommendations, they're not necessarily going to be something that you have to have, or that you need to have, but you need to talk to someone, because having the right insurance in place can help safeguard your business from unexpected financial losses and legal liabilities. As I've mentioned before in other videos regarding insurance, whether it's personal insurance or business insurance, insurance is something that you pay for and hope you never have to use. And I would wager to say that the majority of people are underinsured for all kinds of things; their cars, and their homes, and whatever else – you're underinsured because everybody wants to have the lowest premium, they're like, “I need the lowest premium.” Well, having the lowest premium might not give you the coverage that you need. And then when something happens, your insurance will only cover up to that policy limit. And then guess what? You're responsible for the rest of it. Take that into consideration. Paying more now may be more beneficial.

So, thank you for taking time out of your day today to be with me here or catching the replay. I hope you have a fabulous Thursday, and I hope you have a fabulous weekend. See you next time. Same time, same place for Coffee Chats with Candace. Make sure to drink your coffee and have a great Thursday.