I am starting a business, what business insurance do I need?


Starting a new business can be an exhilarating and daunting time. Stepping out and offering a product or a service to the community brings a whole new world of opportunity, and risk.

Commercial Property Insurance

Commercial Property comes in a variety of shapes and sizes. Buildings, Business Personal Property (BPP), Personal Property of Others, Tools, Mobile Equipment, the list goes on and on. If you have a tangible asset (or intangible, like Accounts Receivable or Computer Data) there is a way to cover that property, and your PA home owners insurance won’t cover very much business property.

In fact, a homeowners insurance policy stops covering any detached structure on your property that is used for business. So if you started your business in your shed or barn, you need to make sure you have Commercial Building insurance!

Commercial General Liability

Liability insurance covers you and your business if someone hurts themselves at your business or with your products. A commercial general liability insurance policy also protects you when your operations cause property damage.

For example, let’s say your business has an icy sidewalk and Mrs. Glass attempts to enter while speaking on her brand new smartphone. She doesn’t notice the ice, slips and falls, breaking both her phone and her phone hand! Your commercial general liability policy would cover those claims against your business (and your business insurance company would ask that you put into place policies and procedures that would decrease the likelihood of that incident happening again).

Commercial Auto Insurance

Most personal Pennsylvania auto insurance policies will not cover business uses, nor will they cover certain types of vehicles that are only used for business (vehicles can be too heavy or have the wrong body style like a dump bed or a bucket arm). If your business is going to own vehicles, you must have a commercial auto policy.

Some businesses use additional commercial vehicles as a write-off for tax purposes and may have family members of the officers or owners driving the vehicles. It is very important to make sure you have “drive other car” coverage when you only have commercial auto insurance because those family members are NOT covered for first party benefits when riding in cars not listed on the policy!

Commercial Umbrella Insurance

Catastrophic losses can change the financial future of a business. Imagine you owned the trucking company responsible for the diesel fire in Harrisburg two weeks ago! Chances are you would be held liable for the damage done to those bridges, in addition to the pollution to the wildlife reserve. The property damage alone must be in the tens of millions of dollars, and no one was hurt except for the driver who would be covered by Workers Compensation.

Some other incidents that aren’t too hard to imagine:

1) The restaurant you own accidentally exposes a customer to a food they are severely allergic to and they die.

2) Your floral business has three delivery vehicles. During a rain storm, one of the vehicles hits an SUV carrying some children home from a cancelled soccer game.

3)The most experienced HVAC technician you have makes a mistake that causes a home to fill with carbon monoxide, poisoning the family.

These seem very harsh, and maybe improbable, but they are not impossible. Every business could incur catastrophic liability, and should protect themselves with at least a $1,000,000 limit umbrella insurance policy.

Workers Compensation

I’ve written before about why workers compensation exists. Simply put, if you have even just one part time employee, you need a Pennsylvania workers comp insurance policy. Starting out, this can be a bitter pill to swallow because the first few years of your workers comp policy will be the most expensive, until you’ve had enough experience to establish an experience modifier based on your claims. If you don’t have claims, you can expect a discount, or credit. If you have more than average frequency or severity of claims, expect additional charges or debits. The penalties or prizes can be significant, so it pays to have a good workers compensation company on your side, helping you manage claims, and evaluating the safety policies and procedures in your business.

Business Life Insurance

Do you have partners? What happens if one of them passes away unexpectedly? Will you suddenly be partners with their spouse or children? Would you like being partners with those relatives?

If you’re unsure of the answer to any of those questions, contact Heritage Insurance Agency and we can talk about insurance that will cover your business in case something tragic happens to one of your key players. Life insurance and disability insurance are great ways to transfer those risks, and fund buy-sell agreements.

Bottom Line

If you are starting a business – contact an independent insurance agent, like New Heritage Insurance, for a thorough review of your operation and design a Pennsylvania business insurance package to protect your new business assets.

photo credit:IIP State via photopin cc

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