Things to be Aware of Regarding Umbrella Insurance Policies

Umbrella policies generally carry requirements that you purchase specific policy limits on your auto and/or homeowners policies. Be sure to check with your producer to verify that you have purchased adequate underlying limits.

Businessowners Insurance

If you own a small business, a businessowners policy or BOP is a way to purchase a variety of property and liability coverages as a package.

Most but not all small businesses are eligible for this insurance, with typical coverages that include Buildings such as apartments and offices; personal property, in offices, apartments, and connection with mercantile operations; service and processing businesses such as bakeries, barber shops, funeral homes; with certain limits, contractors; restaurants, including fast food; convenience stores with gas pumps; laundries and drycleaners; and with certain limitations, wholesalers.

Eligible businesses can get two basic types of property coverage with the BOP, one on the standard, “named peril” form and on the special “all risk” form.  The main difference between the forms lies in the breadth of coverage.  The standard form covers a list of causes of loss, “named perils” and the special form simply covers any loss that is not excluded or limited.  Examples of causes of loss covered on either policy form are fire, lightning, sprinkler leakage, and smoke to name a few.  Additional coverages may also be offered depending on the insurance company.  Business income coverage is a common form of additional insurance, purchased as a way of covering the actual loss of income if operations are suspended while the business recovers from another cause of loss.  Property coverage is generally available on a replacement cost or actual cash value basis on both forms with replacement cost the more expensive of the two.

Liability coverage under the BOP protects the assets of a business when it is sued for something the business did or failed to do that caused property damage or injury to someone else.  The insurance company also defends the policyholder in a suit and pays legal costs.  Liability coverage in the BOP is generally on an “excess” basis meaning that if other coverages such as from a general liability policy are available for a particular loss the BOP will pay after the other policy has paid.  The BOP has combinations of separate and aggregate limits for liability and medical expense, product-completed operations, damage per fire, and general aggregate limits.

Although it provides a good general package of coverages for the small business, the BOP does not provide all the insurance a business owner typically must purchase.  Auto liability, workers comp and health insurance must also be considered.

Workers’ Compensation Insurance

If you are a business owner, Alaska law requires you to obtain workers’ compensation insurance coverage for your employees in the event of injury or death on the job. In exchange for providing coverage for medical expenses and compensation for lost wages, you as the employer are protected from lawsuits from your employees should they be injured on the job. Without the protection provided by your workers’ compensation insurance policy, a single serious injury to one of your employees has the potential to financially ruin your small business, either because of high medical bills or because of the time and expense that you must expend to defend and pay for any judgments against you should your employee sue you over his or her injury.