There are many things to consider when searching for a commercial insurance quote. It is a good idea to work with a trusted broker; however, it is not always necessary. Whether a business works with an agent to secure insurance goes to the insurer direct, there are some common business insurance misconceptions that a business owner should be aware of. Here is a list of the six misconceptions in commercial insurance.
- Comprehensive General Liability Insurance Coverage is Worldwide Coverage. In fact, the standard CGL policy only covers for occurrences that take place in the "Coverage Territory" which is defined as the US, its territories and possessions, and Canada. With the advent of the internet, more and more businesses are doing business in other countries.
- The Comprehensive General Liability Automatic Coverage Automatically Covers New Joint Ventures, LLCs, or Partnerships. That would only be the case if all the owners of the company listed on the insurance also own 100% the new venture . If any new owners, partners, or joint venturers have any ownership in the new operation, then the automatic coverage extension does not apply. All new joint ventures, LLCs and partnerships should be reported immediately to the insurance company or to the broker of record.
- Small Companies Do Not Need Fiduciary Liability Insurance. Perhaps, small companies need it more. Most benefits of small businesses are administered by one person who wears many hats. Few small businesses can afford to have one dedicated benefits adviser. Expensive mistakes and oversights are really very common in the administration of employee benefits. Buying some fiduciary liability insurance is a great way for a business owner to get a bit more sleep.
- Commercial Property Insurance Includes Coverage for Flood. Like in personal insurance, commercial property insurance policies usually exclude damage resulting from flood. Business owners can get flood insurance from the National Flood Insurance program, even if it only for business contents such as inventory, stock, and office equipment.
- Comprehensive General Liability Insurance Covers Professional Errors and Mistakes. Perhaps the most common commercial insurance misconception is that the Comprehensive General Liability insurance policy is comprehensive. Actually, it is not. The CGL offers coverage for bodily injury and property damage arising from negligent acts. There is no coverage for professional mistakes or for faulty workmanship, though there may be some coverage if faulty workmanship causes bodily injury or property damage. If a business offers professional services, Professional Liability or Errors and Omissions insurance is needed.
Commercial Auto Insurance covers for Hired and Non-Owned auto. This is a common mistake. The standard Commercial Auto Insurance policy does not automatically offer this valuable coverage. Hired and Non-owned auto insurance is an endorsement that must be added to a Commercial Auto policy or to a Commercial Package Insurance policy for a busiess to have auto liabililty coverage if a business owner or an employee uses their own vehicle to attend a sales meeting or run an errand for the business.
Using an experienced insurance broker is not necessary for small businesses to obtain a great commercial insurance quote for their business, when they know what to ask for. Working with a broker is advantageous if the owner has additional questions or needs more detailed advice.