A weekly look at Wyoming business questions from the Wyoming Small Business Development Center, part of WyomingEntrepreneur.Biz a collection of business assistance programs at the University of Wyoming.
By Mark Atkinson, WyomingEntrepreneur.Biz southwest regional director
"What is business insurance and how much do I need?" Steve, Greybull
Business insurance, also known as commercial insurance, is a protection no business should be without. Just like the insurance for a home or car, it provides indemnification in case of a sudden and unexpected loss.
There are multiple types of commercial insurance, some of which include:
-- A basic policy, described in more detail below. This is often called a "BOP" or business owner's policy.
-- E&O insurance, which means errors and omissions. This protects an owner in case a professional error is made and a suit is brought against the business.
-- Executive insurance (also called directors and officers insurance), which protects executives against charges of fraud and other misdoings. This is a common recruitment tool to attract talented executives
-- Commercial auto, which protects a company's automobiles. Many people use their personal automobiles for business without this protection. It should be considered because if a personal auto insurer finds out a policyholder is using a personal auto for business, and tries to make a claim, the insurance company can deny the claim.
The basic components of a business owner's policy can vary greatly from insurer to insurer, but some common elements in most basic BOP insurance are:
-- Property coverage for a building you either rent or own.
-- Premises liability coverage protects a business owner if someone is injured on the property.
-- Business property coverage, such as for equipment and supplies.
-- Business interruption coverage, which pays to keep operations going should a covered loss or peril shut down the business temporarily.
-- Signage coverage, which covers the signs at a local business.
-- Inventory coverage for theft or other covered loss.
-- Liability coverage for business use of employees' cars.
-- Employee dishonesty coverage.
What a BOP does not cover is professional liability, auto insurance, worker's compensation or health and disability insurance. Separate insurance policies for these risks are needed.
A blog version of this article and an opportunity to post comments is available at http://www.wyomingentrepreneur.typepad.com/blog/.
The WSBDC is a partnership of the U.S. Small Business Administration, the Wyoming Business Council and the University of Wyoming. To ask a question, call 1-800-348-5194, e-mail wsbdc@uwyo.edu or write 1000 E. University Ave., Dept. 3922, Laramie, WY 82071-3922.
Posted on Monday, May 04, 2009