Have you ever taken a good look at your business insurance policy, only to find that you don’t understand half of the phrases that are used? Well, you’re not alone. Underwriters have an uncanny ability to use insurance jargon to twist the meaning of certain policies, and even the slightest changes can impact your coverage in a big way.
The first step to understanding the coverage offered by your small business insurance policy is by understanding the phrases used by policy underwriters. Since the glossary is expansive, doing some extra research or consulting with an independent insurance agent may be in your best interest. Here are a few of the most commonly used phrases and exactly what they mean for your insurance policy:
Business Interruption Insurance
This phrase refers to any damages or losses that are covered by your insurance plan, in case the business needs to temporarily shut down or move locations due to an accident, building structural issues or product breakdown.
Employment Practices Liability
This one is crucial for any business owner. When your business starts to hire employees, you may come across a current or former staff member that tries to claim discrimination, wrongful dismissal or harassment against you and your business. Employment practices liability covers you in case such a situation arises.
Professional Indemnity Insurance
Otherwise known as professional liability insurance, this type of coverage is crucial to protect you against claims from customers or third party vendors. If a customer files a claim against your advice or services, the coverage will protect you. Additionally, professional indemnity insurance also protects you in the case of copyright infringement or intellectual property issues.
Errors and Omissions Insurance
Also known as E & O Insurance, this type of coverage helps protect a business if loss or injury is incurred by a client during a transaction. This could mean professional errors that occur while providing a service or mistakes made in carrying out a specific work-related task. Either way, errors and omissions insurance is important to keep you and your business safe in case a mistake does occur.
Key Person Insurance
Depending on how your business is organized, this type of coverage allows for one person to have a life insurance policy through the company’s coverage. Generally speaking, this insurance is given to a highly-valued individual in the business in order to offset potential costs that occur after their passing, and the transition to finding a replacement for the key person. If you are not able to compensate your employees after an accident that could disrupt their working lives, they will look to work for companies that do. Don’t lose valuable employees because you tried to shave off a few extra dollars on your insurance premium.
Umbrella liability coverage is an additional layer of protection that keeps you safe from major claims or litigation against your business. If you’re unsure how much your business would benefit from umbrella insurance, do some research or ask an insurance agent to see if the coverage would be helpful. Considering the relatively low cost, you may want to consider getting the policy just in case something does arise.
The world of business insurance is a confusing and overwhelming one, especially to those without experience with the jargon. As a business owner, understanding the phrases and statements used throughout your insurance policy is crucial when deciding on what coverage your business needs. Keeping an eye out for commonly used terms and lingo will ultimately ensure that you get exactly what you expect from your insurance policy.