Why Your Business Can’t Rely on Workers’ Comp Insurance Alone
Your small business is weathering the storm that is the coronavirus pandemic and the down economy. Things are tight, and while you value your employees and would never let workers’ compensation coverage lapse, you might be tempted to skimp on other expenses you think might be non-essential right now to save money. Those expenses might include the other types of insurance you’ve been paying for but have never had to file a claim.
Big mistake. A business needs much more than workers’ compensation insurance to cover possible losses in case of accidents or worse. You are working too hard to keep your business afloat to risk losing everything in a lawsuit. Here is an overview of the types of insurances any business should carry, from the office of a busy workers’ compensation attorney in Philadelphia.
General Liability Insurance
General liability insurance (GLI), also known as commercial general liability insurance (CGLI), is a bundle of different types of coverage that can include premises liability insurance, property damage claims against your business, medical expenses if someone is injured on your property or through the fault of your business, and advertising injury claims.
CGLI may also include product liability coverage, unless the product you make, distribute, or sell is particularly hazardous or prone to lawsuits. In those cases, specialty product liability coverage is available, although at higher premiums.
Many insurance carriers offer GLI or CGLI, and the deductibles and extent of coverage will vary. Of course, do not pay more than you have to in premiums, but do not go without coverage entirely. A single third party injury on your premises or at your job site, or a defective products lawsuit, could put you out of business if you are not insured.
Business Owners Policy
If you’re just starting your own business, you may not have heard of this one. A Business Owner’s Policy (BOP) will have much of the same coverage as a CGLI but will be tailored to your business needs. Smaller businesses usually opt for a BOP, especially when their risk of loss is not great, for example, if they are not in the business of producing, distributing, or selling goods, do not allow the public on their business premises, or offer services that are not required to be licensed and bonded or to carry malpractice insurance. In these cases, a small business can procure a BOP that includes premises liability bundled with any other type of coverage they need fairly inexpensively.
Commercial Auto Insurance
Your commercial auto insurance will cover all company vehicles and authorized users. Commercial auto insurance covers third parties should they be injured or sustain property damage in an accident with one of your workers driving a company vehicle.
Your vehicle’s damage will be covered by your commercial auto insurance as well. Your driver’s injuries, wage loss, and any temporary or permanent partial or total disability will be covered under your workers’ comp insurance as long as your driver was driving the company vehicle at your direction or as part of their regular work duties.
Malpractice (Errors and Omissions) Insurance
In many states, professional service providers such as accountants, medical practitioners, and attorneys must carry malpractice insurance. Malpractice insurance protects professional service providers against claims of failing to perform a service adequately. Usually, malpractice insurance will pay for representation in litigation, and will also pay to settle claims when necessary.
Interestingly, tradespeople do not carry malpractice insurance. Rather, they are licensed by their state and required to be “bonded.” A “bond” works similarly to malpractice insurance in that a contractor or a company providing services in the trades purchases a surety bond and pays regular premiums to renew that bond. Their customers are protected if the contractor fails to pay for permits, does not complete the job properly, or steals from or damages the customer’s property.
In conclusion, it is a false economy to let insurance lapse and save on premiums. Most small businesses are one lawsuit away from going out of business, so make sure you keep paying your premiums.
About the Author
Veronica Baxter is a blogger and legal assistant living and working in the great city of Philadelphia. She frequently works with Larry Pitt, Esq., a noted Philadelphia workers’ compensation lawyer.
