Pile It On

Additional Protection

What about off-premises property? Property insurance protects your business against physical damage to, or loss of, your assets, covering the cost of repair or replacement. Assets, broadly defined, include the area where your business operates and the property housed there. But in the event your notebook computer is swiped while you're at the airport, you're going to want it covered. So keep in mind that insurance providers typically set sub-limits for property that's in transit or off the premises. With some providers, these limits are built-in, whereas others require you to add them on as supplemental coverage, as Wedel did.

Employment practices liability insurance (EPLI) is another area quickly becoming a common supplement for entrepreneurs. Global Protection recently added EPLI to protect against such situations as sexual harassment, age discrimination and wrongful dismissal. You may also want to check out an important, yet often overlooked, type of insurance that isn't included in general liability policies (or BOPs for that matter): directors and officers liability insurance, or D&O. If you are a board member and found to be negligent, your personal assets are at risk. With D&O insurance, you can deflect that risk. And remember, as all the supplemental coverages begin to add up, you should probably investigate lowering your premium. If, for instance, your goal is to increase your property coverage, you can lower the cost by taking just a few simple steps. Small changes, such as keeping duplicate records off-site, can result in premium savings.

After getting an idea of what additional liability insurance would cost him, Wedel focused on decreasing the rates. He and Skelly brainstormed and did some research that they presented to the insurance underwriters to illustrate what limited liability the company actually faced. By providing a thorough background on the condom-manufacturing industry, which not too many people are familiar with, and showing the underwriters how few lawsuits had been brought against condom companies, they were able to negotiate a lower premium.

Communicate with your broker about ways to save money. Even if it's an investment, such as installing an alarm system, you could end up saving money in the long run, because premiums add up quickly.

Whether it's coverage for products in transit or property insurance, don't dismiss supplemental business insurance as unnecessary extras. Because if you're hit with a lawsuit or a storm, "extra" could mean all the difference.

Business Insurance Supplements

The following are types of supplemental business insurance you should check out to make sure your company is fully protected:

  • Auto insurance (or fleet insurance): Provides coverage for injury, damage or theft. It's wise to have coverage even if you don't have company-owned vehicles in case you (or an employee) get into an accident while driving a personal or rental car on company business.
  • Business interruption insurance: Related to a business's inability to function due to losses incurred by covered perils like fire or storm damage. It provides compensation for lost income, ongoing expenses such as rent and the costs of setting up a temporary facility.
  • Crime insurance: A type of crime/fidelity insurance that covers the cost of losses arising from employees' dishonesty or fraudulent acts such as forgery, burglary, computer fraud and extortion.
  • Directors & officers insurance: Protects the personal assets of directors and officers from liability claims related to their organizational activities.
  • Product-related insurance: Covers manufacturers' or sellers' liability for losses or injuries to a buyer, user or bystander caused by a defect or malfunction of their product.
  • Umbrella insurance: Provides additional liability coverage above and beyond the limits of coverage as stipulated in your main policy.

Mie-Yun Lee is the founder and editorial director of BuyerZone.com, a premier online marketplace for growing businesses. Doreen Bentley contributed to this article. For more information on business insurance, go to www.buyerzone.com/business_insurance/index.html.

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This article was originally published in the February 2001 print edition of Entrepreneur with the headline: Pile It On.

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