Frequently Asked Questions

Builders’ risk insurance is a policy that will help pay to repair, replace or recover the current value of a construction project. This includes a number of different claim types such as fires, theft, labor costs and natural disasters.

As a builder or building owner, having the proper builders’ risk policy in place could save your project and you thousands of dollars in expenses.

Finding the right local independent insurance agent that is experienced in the different types of builders’ risk policies is key to a project staying on track.

The majority of the time financing is involved in a building project and most financial lenders require a builders’ risk policy to be in place prior to any work being performed.

However, there is the off chance that the project is fully funded by either the builder or the building owner and no proof of builders’ risk insurance is required. Having it as part of your practice is a wise decision and usually an inexpensive one at that.

If you’re building a new home or remodeling an old home, builders’ risk insurance should be provided to have proper protection for all parties involved. Most of the time your lender will require proof of builders’ risk insurance. If there is not a lender, then the homeowner should be requesting this of their builder.

Having a builders’ risk policy in place for your home building project will do two things. First, it will ensure that none of the claims that could arise during a build-out will fall under your responsibility. Second, the policy will also protect the builder from having to come out of pocket to pay for any claims.

You can see that this is a beneficial insurance policy for everyone. Contacting your independent insurance agent to go over details of your builders’ risk project is the first thing to do.

A builders’ risk insurance policy protects a construction project and almost everything that’s part of the process as soon as it’s on location, including the actual structure and even building site necessities such as porta potties.

The biggest difference between policies is what they protect against, like fires, explosions and falling objects.

Builders’ risk insurance policies will fall into three different forms of coverage: basic, broad and special.

• Basic: Protects against fire, lightning, wind, explosions and more.
• Broad: Protects against everything included in basic, as well as several additions like falling objects, water damage and a few more.
• Special: Protects against theft and everything else.
• Exclusions and claims not covered: The three forms of coverage will not protect against accidents, injuries and liability risks, as well as certain natural disasters like floods and earthquakes. Also, any peril that is specifically excluded from the policy will not be covered.

Despite its name, inland marine insurance has nothing to do with protecting your boat. While the main job of this type of insurance is to protect commercial goods being shipped over land, it also covers personal property being shipped and expensive valuables that are stored at a home or business.

In many cases, inland marine insurance can step in to fill gaps left by your homeowners insurance.

In most cases the shipper is off the hook once the package is delivered, and whether the loss is covered by your homeowners insurance will vary by policy. Inland marine would step up and cover these types of losses.

Inland marine insurance will also step up if your shipped valuables are lost or damaged and the value exceeds the shipper’s declared limit value, which is often much lower than you would think.

When it comes to protecting your valuables in transit, inland marine coverage can end up saving you thousands.

Inland marine insurance can be beneficial to both large and small businesses. It not only protects your business property while it’s being transported, it also covers a customer’s property while it’s in your possession.

Protection of goods and equipment in transit is a big benefit of inland marine coverage and applies to all different types of shipments. A few examples are:

A commercial inland marine policy may also cover damage your equipment does to infrastructure.

These policies offer coverage for all moveable property and equipment as it’s transported from location to location, and typically offer full protection regardless of where the equipment is located at the time of loss or damage.

This fills in a gap that exists in other insurance products. A homeowners policy doesn’t cover property or equipment that is used in a business capacity, and most commercial policies limit their coverage for equipment that is off the premises.

The type of equipment covered by inland marine insurance is virtually unlimited, but here are a few examples:

Commercial inland marine insurance also protects fixed property that is deemed to be involved in transportation or communication under the instrumentality of the transportation or communication sections of a policy.

These fixed asset types include pipelines, wharves, docks, transmission lines, outdoor cranes and other loading equipment.

One final advantage of these policies is the protection they offer to bailees. Bailees are businesses that have possession of another person’s property for repair, service or storage.

A commercial inland marine policy protects all of the property in their possession, covering all legal liability should a client’s property be stolen, damaged or lost.

Just a few examples of bailees who would benefit from inland marine insurance are:

The main difference between traditional cars and collector cars is that collector cars usually don’t depreciate. In fact, they often increase in value. Moreover, collectors often add customized parts to the vehicle, not to mention hours of time improving the car.

Thus, collector car insurance must be based on the “agreed value” of the vehicle at the time the policy is issued. The agreed value includes your entire investment in the car.

Moreover, rates for antique collector car insurance are normally cheaper than they are for traditional coverage, since collectors tend to take better care of the vehicle and drive it less than they do a car meant strictly for transportation.

Several types of cars are eligible for car collector insurance. These typically include vintage and antique cars, classics, “modified cars,” and “exotics.”

Every auto insurance carrier has its own criteria for defining collector cars. What one carrier considers an antique vehicle may not meet the criteria of another company.

Typically, if a car is at least 20 years old and is in near factory condition, most carriers will consider it antique or classic. Classic cars with considerable customization may be categorized as modified. It all depends on the individual insurance provider.

The agreed value of your antique or collector car is a value that both you and the insurance company underwriters can agree on.

Using photographs, receipts, repair documents, and other information, both parties come to an agreement that the car is currently worth a certain dollar amount, and should be covered for a maximum of that amount in the event the car is totaled.

The agreed value is different from the actual cash value, which is based on the age, mileage, and overall condition of the vehicle as well as other factors, including depreciation.

The reason agreed value is important for an antique or collector car is that you are the only one who really understands how much you have invested in your vehicle. It takes into consideration the amount of time and money you have spent restoring the car, as well as how much you might charge if you sell it.

Normally, insurance carriers are willing to offer you the amount of coverage you desire; however, the greater the coverage, the more expensive your premium will be.

Business umbrella insurance is an extension of your general liability or business owners insurance policy. Providing your business with additional liability coverage above and beyond your underlying liability policy in the event, your limits get exhausted.

Your business should have a general liability or business owner’s policy in place to start with. If you have company vehicles titled in the business name then you should also have a business auto policy. Those are the basic policies that a business umbrella policy would go over.

Business umbrella insurance provides additional coverage to all the underlying policies that you hold for extra protection. The excess insurance can be anywhere from one million to several million dollars.

When your benefits get exhausted by a large claim on your underlying policies, then business umbrella coverage will start. Some business umbrella policies have a deductible that would need to be met prior to coverage starting.

A  business umbrella policy will provide additional liability insurance above and beyond your underlying liability insurance policies. Coverage will start once your underlying coverage limits have been met.

For example: If your company has delivery trucks, then you will have a commercial auto policy that most likely has a limit of a million dollars. Your umbrella policy would provide an additional million dollars above your auto policy that would start once the auto policy limits have been exhausted.

For some companies, business umbrella insurance is mandatory. For example, the federal government requires businesses such as oil companies to have umbrella policies. For the general business owner, business umbrella insurance may not be required unless a contract, client or landlord requests it.

However, even if business umbrella insurance is not mandatory, it is a necessary coverage to obtain for your operation. Without coverage it’s likely your business would suffer extreme financial loss.

Umbrella insurance is a separate insurance policy that acts as a liability “umbrella” in the sense that it extends over almost all of your underlying insurance policies, such as your auto, home, motorcycle, and boat policies.

It’s a liability-only policy, meaning there is no physical damage coverage for anything. It simply gives you extra liability limits that you can use if you exhaust your auto or home liability limits in a claim.

Most insurance companies offer umbrellas in million dollar increments, often starting at $1 million and ending at $5 million. Some companies might offer a lower limit, such as $500,000, while you’ll probably have to go through a very large insurance company to get limits higher than $5 million

Umbrella insurance covers lawsuits, settlements, and legal defense costs that you’re involved in, as long as the reason for the lawsuit is covered in the policy. The lawsuit must be a civil lawsuit, known as a tort, and not a criminal one.

Simply put, if you’re involved in a lawsuit that one of your primary insurance policies is paying for, such as an at-fault auto insurance claim, then your umbrella policy would act as an extra source of liability money.

For example, many people buy a $1 million umbrella policy. Let’s say your underlying auto insurance limits are $100,000 per person and $300,000 per accident. If you’re involved in an accident with four people and all four of them have serious injuries totaling $250,000 for each person, then you’d owe a total of $1 million in injury claims.

Your auto policy would pay out $100,000 to three people for a total of $300,000 paid from your auto policy. But it won’t pay more than that, since your limit is $300,000 per accident.

Without an umbrella, you would be on the hook for the other $700,000. But since you have a $1 million umbrella policy, then it will pay for the remaining $700,000 from your accident.

Note: It’s possible that your umbrella policy would pay for a claim that your homeowners or auto insurance doesn’t, though these type of umbrella policies aren’t as common today.

You should consider buying umbrella insurance if you have assets greater than what your other policies’ liability limits are. For example, if your auto policy is $100,000 per person and $300,000 per accident, and if you have assets including a mortgage that’s worth more than $300,000, then you should probably consider buying an umbrella policy. A $1 million umbrella will extend your auto liability limits to $1.3 million per accident.

Note: A personal umbrella policy will not cover your business. If you own a business, you’ll need a commercial umbrella policy. Similarly, a personal umbrella will not cover a farm. You’ll want to buy a farm umbrella policy for that.

Umbrella liability claims are no different than regular liability claims, other than the underlying policy doesn’t have high enough limits so the umbrella kicks in. The most common types of claims that need to dip into an umbrella include:

• Serious car accidents: Thousands of people die in car accidents each year, with thousands more having serious hospitalizations. The bill for these types of accidents can easily exceed $500,000, which you would be on the hook for unless you have an umbrella policy.
• Dog bites: Most dog bite claims are adequately covered by homeowners liability limits, but if there’s a tragic death involved, you could be sued for more than that.
• Trampoline accidents: Similar to dog bites, if there was a tragic accident that resulted in a death, you could be sued for more than what your homeowners insurance liability covers.
• Swimming pool accidents: Serious injuries, paralysis, or death could result in you being sued in the hundreds of thousands of dollars or more, meaning you’d need an umbrella policy to cover those costs.

A vacation home insurance policy is designed to provide coverage for your secondary property. It’s also known as seasonal home insurance and secondary home insurance, depending on your intended usage of the property.

Vacation home insurance covers property damage, liability claims, burglary, recreational vehicles and more depending on the conditions of your policy.

Let’s be upfront: The quotes for a vacation home are typically higher than if the same home were your primary residence. The reasons for high premiums include:

Each of these factors plays a role in the greater likelihood of filing an insurance claim, hence the costs.

Insuring a vacation home is relatively simple: homeowners can purchase an independent home insurance policy for the seasonal/secondary residence.

Some companies, such as Farmers Insurance, don’t require you to have a homeowner’s policy to insure your seasonal or vacation home. Either way, premiums are based on the same factors as any other residence. These include:

Of course, nearly every vacation home insurance company applies different surcharges and prices their premiums at different amounts.

To give you an idea of how much it varies, Nationwide currently applies a 20% increase to policies covering secondary vacation homes, and State Farm only charges 10% for the same coverage. To make things even more complicated, you may be able to lower the cost if:

Also known as professional liability insurance, E&O covers lawsuits that arise from rendering negligent professional services or failing to perform professional duties. This coverage is typically recommended for lawyers, accountants, architects, engineers, IT companies, or any company where individuals provide a service to clients for a fee.

There are a variety of professional liability policies (E&O), each covering a different profession and the risks that they entail.

The policy itself will protect you financially from legal claims and lawsuits up to your selected policy limits in the event you make a mistake and advise or treat someone incorrectly.

There are a couple of different coverage types of professional liability insurance, based on what you do and provide to customers or clients.

• Malpractice insurance is coverage that’s specifically designed for medical professionals such as psychiatrists, podiatrists, and gynecologists. It protects against lawsuits that allege negligence or mistakes. If you work in the healthcare industry, malpractice insurance should be the first policy you obtain.
• Errors and omissions liability insurance is also known as E&O insurance is coverage that’s designed for those who provide advice or services such as lawyers, consultants, insurance agents, and architects. It protects against lawsuits that claim a financial loss occurred based on bad information or negligent advice.

A lawsuit in the professional industry is not unheard of and in fact very common. There are two kinds of professional liability policy coverage types:

• A claims-made policy must be in effect both when the lawsuit is filed and when the incident in the suit took place. This type of policy is the most common, and is usually less expensive.
• An occurrence policy covers any incident that takes place during the coverage period, even if the actual lawsuit is filed after the policy expiration. This type of policy provides more comprehensive coverage and is higher priced.

Employment practices liability insurance, commonly referred to as EPLI insurance, is specifically designed to protect employers from lawsuits brought by employees. It provides coverage for many situations that general liability insurance does not.

Even lawsuits that are thrown out of court or are won by your company are expensive, due to the high cost of securing legal defense. Therefore, this insurance coverage is very important as financial protection for your business enterprise.

Unless you have an EPLI policy, your business is not covered against employee lawsuits. According to an industry study, 6 out of 10 non-buyers of EPLI coverage mistakenly think they are protected under other policies.

If you are not carrying an EPLI policy, your business is not alone. A study done by Advisen found that only 23% of companies with fewer than 100 employees purchase EPLI insurance; that number is 34% for companies with 500-700 employee,s and 40% for businesses that employ over 1,000 people.

Employment practices liability insurance provides compensation for losses caused by employee lawsuits. All court costs and legal fees are included in coverage.  EPLI insurance protects your business from the following and more:

You’ve probably heard of auto gap insurance — a separate policy to cover the difference between what car insurance covers and what is still owed on the loan for a vehicle.

Employers liability insurance is purchased with the same thought in mind: to protect your business from costs resulting from employee claims that are not covered by workers’ compensation benefits.

It covers the gap between your company’s bottom line and lawsuits stemming from employee activities. Some insurance companies and state regulations even refer to employers liability insurance as “stopgap coverage.”

Your state, or the county in which you do business, may even require you to carry employers liability insurance. Which is why it’s important to work with an experienced insurance agent who is familiar with your industry, the area in which you do business, and any laws with which you must comply.

You may already have a professional liability policy, an EPLI policy (employment practices liability insurance), a general liability policy, and perhaps a host of other coverages to protect your business from liability risk exposures.

Do you really need another liability insurance policy? Yes. Not one of these products fills the gap between workers’ compensation and your revenues and assets, but employers liability insurance does.

As great as employers liability coverage is, it still doesn’t cover everything. It also contains exceptions, such as:

Many businesses owners are under the misconception that any employee injury on the job is covered by their workers’ compensation benefits. In reality, there are several exceptions that aren’t. However, they are covered by employers liability, like:

• Third-party countersuits. Say an employee is injured due to equipment malfunction while operating a forklift. They file for workers’ compensation and your business is covered, right? What if they also sue the manufacturer of the forklift? The manufacturer’s lawyers will most likely bring a cross suit against your company, claiming the malfunction was due to improper maintenance. Workers’ compensation won’t help you fight that case, but employers liability insurance can step in.
• Loss of consortium. In most cases, an employee who receives benefits from a workers’ compensation claim can’t file a lawsuit against the employer. However, nothing prevents the spouse of the injured employee from filing a claim against your business asserting that they have suffered losses due to the injury. Employers liability insurance can pick up the tab for these types of claims.
• Dual capacity suits. These are lawsuits brought by an employee against the employer when the injury stems from a product manufactured by the employer. In such cases, the employer is liable, as both an employer and a manufacturer. Workers’ compensation can’t handle such complicated cases, but employers liability insurance can.
• Gross negligence claims. If one of your managers directs an employee to do something that the manager knows is dangerous and could result in an injury or worse, your business can be held liable, and workers’ compensation will not come to your aid. These are the most common type of employers liability claims and are commonly filed by spouses after a fatality where they believe the employer disregarded the employee’s safety.

Many policies have limits on what they will pay out on these claims. You can choose higher limits and pay slightly higher premiums, but rates are usually fairly cheap for an additional $1 million in coverage.

Or, to increase your limits, you may want to think about a commercial umbrella policy, which works above the employers liability coverage. Your agent can help steer you toward the right choice for you.

Cyber liability insurance is a contract between a business and an insurance company where the insurer agrees to pay for expenses like fees, fines, lost income, and public relations (depending on coverage) to help the company recover from a number of threats and incidents.

If your company gets hacked, cyber liability insurance can help save you from a door-closing disaster in a number of ways which means it’s pretty important coverage to have. The only time we’d agree you don’t need cyber liability insurance is if you don’t keep any of your company or client’s information accessible via technology.

Some bad things that could happen:

Though hackers remain the number one cause for cyber insurance claims, there are a number of big threats out there that can happen at any time.

Fortunately, a cyber liability insurance policy can help protect your company against a big number of breach events.

Cyber liability insurance provides coverage for:

To put it simply, homeowners insurance is designed to repair, replace or recover the value of what you currently have (under coverage) if it’s damaged due to any number of causes.

• Property Damage – This is by far the biggest claim maker, which includes damage to your house and any structures on your property due to water, fire and severe storms among others.
• Natural Disasters – Homewreckers like floods and earthquakes are usually not covered by basic plans, meaning, you’ll need added coverage or a separate policy to keep your goodies protected.
• Standard Home Liability – This will cover you financially if someone is injured or their personal belongings are damaged while on your property.
• Extra Money for Living – If your house is too messed up to live in while it’s being repaired or rebuilt, most policies will pay for a hotel and other living expenses, like groceries.
• Personal Property Coverage (AKA your stuff) – This will depend on the policy. Items like furniture may only be covered up to a depreciated value, but stuff like your bling might not have any coverage and will need additional insurance.

Homeowners insurance isn’t required by law, but most lenders will be sticklers and will require a policy in order to give you a loan. At a minimum, they’ll want your policy to cover or exceed the amount you owe on the loan.

A deductible is the amount you’re responsible for in the event of a covered loss. In most covered loss cases, you are responsible for any amounts up to your deductible level and your insurance would cover anything beyond that up to your coverage limit. For example, if you select a $1,000 deductible and have a $4,200 covered loss, you would receive a claim payment of $3,200 after deducting the $1,000.

A homeowners deductible applies to each claim. If you have more than one claim in a policy period, you will be responsible for the deductible amount for each individual claim regardless of the number of claims you have during that policy period.

Your home is probably the single largest investment you’ll ever make. By insuring your home, you are helping to protect your investment.

Estimating the cost to rebuild your home will help you decide the amount of insurance you’ll want to purchase. The primary factors that’ll determine the cost to rebuild your home include:

• Local construction costs
• The square footage of your home (and the number of bathrooms and other rooms)
• The type of exterior wall construction – frame, masonry (brick or stone) or veneer
• The type of roof
• The number of floors (one to four stories, bi-level or split level)
• Special features like attached garages, fireplaces, exterior trim and arched windows
• Quality of materials and finishes throughout the home

Market value is the amount a buyer would pay for the home and land in its current
condition. It is influenced by factors such as proximity to good schools, local crime
statistics, and the availability of similar homes.

Replacement cost is the cost to replace the entire home. When you insure your home
for its estimated replacement value, your insurer will reimburse you for the cost of
rebuilding your home, subject to policy limitations, based on the size and structure of
the home that was lost.

Replacement cost is not:

• The market value of the home
• The home’s purchase price
• The cost of the land
• The outstanding amount of any mortgage

Homeowners insurance policies typically do not cover but not limited to damage resulting from the following:

• Earth movement
• Water
• Nuclear hazard
• Neglect or failure to make repairs
• Corrosion, deterioration, decay or rust
• Wear and tear
• Contamination
• Fungi
• Increased cost due to enforcement of any building ordinance or law
• Government actions
• Power failure
• Animals or pests
• War

Each fire protection agency (including your local fire department) is reviewed by the Insurance Services Office (ISO) and ranked based on their fire protection services, such as fire equipment, staffing and available water supply. The ranking is called the Public Protection Class (PPCTM) with 1 being the best score and 10 being the worst score. Many insurance companies use the PPC rating and the distance your home is from the nearest legally responding fire department to determine whether they will insure your home and how much to charge

On a homeowners insurance policy, there is limited, standard coverage available for your jewelry. In most cases, you may want to consider purchasing a Personal Articles Floater, which provides coverage for your jewelry when its value is higher than the limits stated in your homeowners policy.

A homeowners insurance policy provides limited coverage for your valuables. In most cases, you may want to consider purchasing a Personal Articles Floater, which provides coverage for your personal articles, such as jewelry, furs or fine arts, when their value is higher than the limits stated in your policy.

This is not necessary but in the event of a loss, having this information would be very helpful. Keep your home inventory in a safe, accessible place in the event you need to file a claim. You can use this PDF to get started. 

Flood insurance usually is a separate policy designed to help protect your home and belongings if they are damaged in a flood. Standard property insurance policies, such as homeowners insurance, typically do not cover flood damage.

The Federal Emergency Management Agency (FEMA) says you can purchase flood insurance coverage to help protect your home, your personal belongings, or both. Here are some of the basics for these two types of coverage:

Building property coverage

• What it helps protect: The physical structure of your home and its foundation; plumbing and electrical systems; central air and heating systems; attached bookcases, cabinets and paneling; and a detached garage (other detached structures need their own policy).
• How it typically pays out: Replacement cost basis (what it would take to repair the home in today’s dollars) for a primary residence and actual cash value (which factors in depreciation) for a vacation home.
• Maximum coverage limit: $250,000

Personal contents coverage

• What it helps protect: Clothing, furniture and electronics; curtains; some portable appliances; freezers and the foods within them; and certain valuables, like art (up to a specified limit).
• How it typically pays out: Actual cash value basis (takes depreciation into account).
• Maximum coverage limit: $100,000

In some cases, you may be required to have flood insurance. If you own a home on land that is at high risk of flooding, your mortgage lender may require you to purchase flood insurance.

Flood insurance isn’t just for homes in high-risk areas, though. The Federal Emergency Management Agency (FEMA) says that all 50 states have experienced floods, and that more than 20 percent of the claims it handles come from the moderate- to low-risk regions.

Flood insurance is generally available to people in communities that participate in the National Flood Insurance Program (NFIP). Flood insurance policies can be purchased through local insurance agents (such as Allen Insurance and Financial) by homeowners, business owners and renters who want protection for their homes, buildings and belongings. (Landlords can buy separate flood insurance policies to help protect the home.)

If you’re building a new home or remodeling an old home, builders’ risk insurance should be provided to have proper protection for all parties involved. Most of the time your lender will require proof of builders’ risk insurance. If there is not a lender, then the homeowner should be requesting this of their builder.

Having a builders’ risk policy in place for your home building project will do two things. First, it will ensure that none of the claims that could arise during a build-out will fall under your responsibility. Second, the policy will also protect the builder from having to come out of pocket to pay for any claims.

You can see that this is a beneficial insurance policy for everyone. Contacting your independent insurance agent to go over details of your builders’ risk project is the first thing to do.

A builders’ risk insurance policy protects a construction project and almost everything that’s part of the process as soon as it’s on location, including the actual structure and even building site necessities such as porta potties.

The biggest difference between policies is what they protect against, like fires, explosions and falling objects.

Builders’ risk insurance policies will fall into three different forms of coverage: basic, broad and special.

• Basic: Protects against fire, lightning, wind, explosions and more.
• Broad: Protects against everything included in basic, as well as several additions like falling objects, water damage and a few more.
• Special: Protects against theft and everything else.
• Exclusions and claims not covered: The three forms of coverage will not protect against accidents, injuries and liability risks, as well as certain natural disasters like floods and earthquakes. Also, any peril that is specifically excluded from the policy will not be covered.

Unless the cause of loss is excluded in the policy, a homeowners policy provides
coverage for personal liability, medical payments to others and accidental direct
physical loss to your dwelling.

In addition, the policy provides coverage for your personal property for specific perils
including, but not limited to:

• Fire
• Lightning
• Windstorm
• Hail
• Theft

Flood insurance usually is a separate policy designed to help protect your home and belongings if they are damaged in a flood. Standard property insurance policies, such as homeowners insurance, typically do not cover flood damage.

The Federal Emergency Management Agency (FEMA) says you can purchase flood insurance coverage to help protect your home, your personal belongings, or both. Here are some of the basics for these two types of coverage:

Building property coverage

• What it helps protect: The physical structure of your home and its foundation; plumbing and electrical systems; central air and heating systems; attached bookcases, cabinets and paneling; and a detached garage (other detached structures need their own policy).
• How it typically pays out: Replacement cost basis (what it would take to repair the home in today’s dollars) for a primary residence and actual cash value (which factors in depreciation) for a vacation home.
• Maximum coverage limit: $250,000

Personal contents coverage

• What it helps protect: Clothing, furniture and electronics; curtains; some portable appliances; freezers and the foods within them; and certain valuables, like art (up to a specified limit).
• How it typically pays out: Actual cash value basis (takes depreciation into account).
• Maximum coverage limit: $100,000

In some cases, you may be required to have flood insurance. If you own a home on land that is at high risk of flooding, your mortgage lender may require you to purchase flood insurance.

Flood insurance isn’t just for homes in high-risk areas, though. The Federal Emergency Management Agency (FEMA) says that all 50 states have experienced floods, and that more than 20 percent of the claims it handles come from the moderate- to low-risk regions.

Flood insurance is generally available to people in communities that participate in the National Flood Insurance Program (NFIP). Flood insurance policies can be purchased through local insurance agents (such as Allen Insurance and Financial) by homeowners, business owners and renters who want protection for their homes, buildings and belongings. (Landlords can buy separate flood insurance policies to help protect the home.)

Condo insurance, also called HO6 insurance, has three parts:

• Dwelling insurance: Covers structural elements like walls and floors.
• Personal property insurance: Covers your possessions stored in the unit.
• Liability insurance: Covers legal fees if someone sues you in cases related to your home.

Condo insurance works similarly to single-family homeowners insurance, but it’s usually a little more customizable. You may decide that you only want to buy personal property and liability insurance if your dwelling insurance is covered by your homeowners association.

Sometimes, homeowners associations pay for dwelling insurance as part of your association dues. You’ll still need to purchase personal property and liability coverage, but you won’t have to worry about structural damage.

However, you definitely shouldn’t assume that your homeowners association will cover everything. Always ask what they cover and what you’re responsible for yourself, preferably before you even make an offer on the condo.

Most of the time, condo owners will bear 100% of the responsibility for insuring their unit. Help from your homeowners association is the exception, not the rule.

Condos often come equipped with special safety equipment. Sprinklers and high-tech security systems are way more common in large condo complexes than they are in your typical single-family home. Condos are also commonly smaller than single-family homes, which means they’re usually less expensive to repair.

Insurance companies love both of those things and often offer better rates to condo owners because of it. However, there are still plenty of risks for condo owners to consider:

Condo insurance is designed to cover these and many more sticky situations for condo owners.

Condo insurance may be a legal requirement depending on your state and municipality, but even if it’s not mandatory, it’s a practical necessity. Your homeowners association may require you to have it. Your bank will almost certainly require it if you’re planning to get a mortgage.

That’s because a crisis in your condo doesn’t just affect you—it affects the units around you and affects your lenders if you can’t afford to make payments. Condo insurance is usually even cheaper than homeowners insurance. There’s no real reason not to have it, and many, many reasons why you should have it.

Let’s start by defining the letters that make up the Medicare alphabet soup and what they mean in terms of coverage.

• Part A: Generally covers inpatient hospital services
• Part B: Usually covers doctor visits, outpatient services, and durable medical equipment
• Part C: Known as Medicare Advantage; an alternative to original Medicare Parts A and B plus D (This plan typically offers drug coverage, plus vision and dental care. Individuals must first enroll in original Medicare to be eligible for Part C Medicare Advantage. The cost of the plan may be the same as original Medicare, but there could be additional charges, depending on the plan selected.)
• Part D: Prescription coverage

Individuals who are 65 or older are eligible for Medicare. Medicare requires enrollment at particular triggering events and at specific times throughout the year. If you are receiving retirement benefits under the social security program, you will be automatically enrolled in Medicare Part B at age 65. If you are covered under a larger group health plan (20 or more employees), you can opt out of Part B and Part D coverage without a penalty.

A specific triggering event (e.g., when you lose group employer coverage) requires that you enroll during the special enrollment period. Enrolling within eight months of a triggering event will help avoid Part B penalties but may not prevent coverage gaps. You should start the enrollment process at least three months before a triggering event occurs to avoid gaps in coverage or the risk of missing a penalty deadline.

COBRA coverage, group employer plans for businesses with fewer than 20 employees, and retiree health plans may not be considered creditable coverage for Medicare Part B. With one of these plans, you would not avoid the Part B enrollment penalty. Medicare would be the primary payer for health services, while these plans are secondary. These plans, however, may qualify as creditable coverage to avoid the Part D enrollment penalty. Here’s a breakdown of those penalties:

• Part B: Individuals pay a surcharge of 10 percent of their Part B standard premium for each 12-month period they fail to enroll.
• Part D: The penalty is 1 percent of the “national base beneficiary premium” per month. In 2021, the national base beneficiary premium is $33.06 per month. This 1 percent penalty is applied to the total number of months an individual is without creditable coverage. This surcharge is added to the Part D premiums.

Please note: You should verify that your current insurance is considered creditable coverage for Medicare purposes to avoid these permanent surcharges.

If you are covered under original Medicare Parts A and B plus D, you might consider purchasing Medigap coverage. Medigap, also known as Medicare Supplement Insurance, offers supplemental coverage for expenses that traditional Medicare doesn’t cover, including vision, dental, medical coverage during international travel, and copays.

Medigap plans (e.g., Plans A through D or Plans G, K, L, M, and N) are federally mandated to provide specific core coverage and are regulated under state law to offer additional supplemental coverage. The coverages and costs will vary between plans.

Please note: Effective Jan. 1, 2020, Medigap Plans C and F are generally no longer available for new enrollees.

The coordination of claim payments between Medicare and other health insurance coverage can directly affect your health care costs. Your Guide to Who Pays First outlines the coordination of benefits for Medicare-eligible individuals. Let’s review some common scenarios and how Medicare coordinates payments.

Employer health plans. If an employer has fewer than 20 employees, Medicare may be the primary payer and the employer coverage is secondary. So, if you are 65 and covered under a smaller employer plan through your spouse’s employer or are still working and covered under this type of employer plan, you should verify with the provider whether the plan is creditable to avoid a penalty for Part B and/or Part D. If the plan is not considered creditable coverage for either Part B and/or Part D, you should enroll in Medicare.

If the employer has 20 or more employees, the employer plan is the primary payer and Medicare is the secondary payer.

TRICARE. If you are 65 and inactive duty military covered under TRICARE, Medicare is the primary payer for Medicare-covered services and TRICARE is generally secondary (unless services are received in a military hospital).

There are special rules for TRICARE-insured military members who are enrolled in specific plan types. Generally, if you are retired, you should enroll in Part B to remain eligible for TRICARE (including drug coverage).

Federal employee health benefits (FEHB) plan. If you are 65 and covered under an FEHB plan and are an active employee, the FEHB plan is the primary payer and Medicare is secondary. Once you are no longer an active employee, the FEHB plan for Part B is not considered creditable coverage. At that point, Medicare is the primary payer. On the other hand, FEHB may be creditable coverage to avoid the Part D prescription plan penalty. FEHB may also serve as your supplemental gap plan.

Retiree employer health plan. Medicare is the primary payer and the retiree health plan is secondary when you are 65 and covered under a retiree employer health plan.

Once you are no longer an active employee, the retiree health plan for Part B is not considered creditable coverage. Medicare is the primary payer. This plan may be creditable coverage to avoid the Part D prescription plan penalty and may serve as your supplemental gap plan.

Once you enroll in any part of Medicare, including Part A, you can no longer contribute to a health savings account. If you are considering collecting social security benefits, in general, you should stop making contributions six months before enrolling in Medicare to avoid a potential health savings account contribution penalty.

Medicare premiums are means tested. The higher your modified adjusted gross income (MAGI), the higher your monthly premium costs. If you have a higher MAGI, you will pay a surcharge, known as the income-related monthly adjustment amount (IRMAA).

In the case of IRMAA for Medicare, your MAGI is generally your adjusted gross income, which includes all taxable income (e.g., retirement account distributions, capital gains, and interest), plus dividends from tax-free bonds, interest from savings bonds used to pay higher education tuition and fees, and foreign earned income excluded from gross income. For 2021, the premium cost will be based on your 2019 MAGI.

Hold harmless rule. This rule protects current social security beneficiaries from increasing Medicare costs in a year when there is no or a very low cost-of-living adjustment. When this rule applies, the cost of any increase in premiums for Medicare are absorbed by a smaller group of recipients: new enrollees and current beneficiaries subject to IRMAA.

• In 2021, the standard Part B cost is $148.50 per person per month. The top Part B IRMAA threshold for a married couple filing jointly is a MAGI of $750,000 or greater. The monthly premium, including the IRMAA surcharge per person, for these enrollees is estimated to be $504.90 per month.
• In 2021, the top Part D IRMAA threshold for a married couple filing jointly is a MAGI of $750,000 or greater. In addition to the monthly premium, an IRMAA surcharge per person for enrollees is $77.10 per month.

You can appeal the IRMAA surcharge amount for specific life-changing events, which include death, divorce, loss of pension, loss of income-producing property, work stoppage, or an error in the determination records. Further information on the appeal process is available on the U.S. Department of Health & Human Services website.

Car insurance provides you with insurance coverage if you’re responsible for an accident and somebody else gets hurt or suffers property damage. This liability coverage can include settlement costs, legal defense costs in court, and the dollar amount that you’re responsible for to the injured person or property.

Liability is the part of car insurance that’s required by nearly every state, though it’s not the only thing covered by car insurance. You can also protect your own vehicle for physical damage to it, as well as add on various other coverage options.

Most auto insurance policies are effective for either 6 or 12 months at a time. During that policy period, your rates are locked in and can’t change unless you make a change to your policy. Once your policy renews, you could receive new rates, either higher or lower, that will be locked in again during your next policy period. ​

Nearly every state, including Maine, has a legal requirement to buy car insurance if you’re going to drive a vehicle on the road. The two states that don’t — Virginia and New Hampshire — have laws that essentially make it required, though technically it’s not mandatory.

For example, Virginia requires you to pay $500 a year to be able to legally go without car insurance, while New Hampshire requires proof that you have the financial assets to pay for any damage you would cause, equivalent to other state’s minimum liability coverage.

Legal requirements aside, it can be too costly not to have car insurance. Serious accidents and deaths happen every day and without car insurance, you could be responsible for hundreds of thousands of dollars worth of injury expenses if you cause it.

Car insurance can also protect your financial investment in your vehicle. Many new vehicles cost at least $30,000, whether financed or not. If you spend the money one time but your uninsured vehicle gets totaled, you’ll have to spend that money again if you want a new car. But if you have car insurance you’ll get most, if not all, of that $30,000 back.

The liability part of car insurance gives money to other people if you’re responsible for their injuries or property damage. There are additional aspects of car insurance that can cover your own vehicle, your own medical expenses, and various other options.

The basics:

• Liability: Car insurance liability is typically broken down into three limits: bodily injury per person, bodily injury per accident, and property damage. The liability limits that you buy, for example $100,000/$300,000/$50,000, mean that the insurance company will pay for injuries or property damage that you cause, but only up to the limit. So your insurance company would only pay a maximum of $300,000 in any one accident if you chose those liability limits.

• Collision: This covers your own vehicle if it’s damaged from a collision with another vehicle or solid object, such as a telephone pole or a building. If you’re in an accident with another car and it’s the other person’s fault, then their insurance should pay for your damage. But if you cause the accident or if you live in a no-fault car insurance state, you’ll need to have collision coverage to pay for the damage to your own vehicle.

• Comprehensive: Also known as Other Than Collision, this covers your own vehicle for almost any other type of damage it could receive. Comprehensive includes damage such as theft, fire, hail damage, falling objects, windshield damage, and nearly anything that’s not wear and tear.

The extras:

• Uninsured/Underinsured motorist: Also known as UM/UIM coverage, some states actually require this. It’s designed to cover your own injuries and property damage if the at-fault person either has no insurance, or their limits aren’t high enough to fully cover your injury expenses.

• Medical payments: This is money that’s paid out to you and anyone in your vehicle if you suffer injuries in an accident. Medical payments is no-fault insurance, meaning it doesn’t matter who caused the accident or what happened: if you got hurt in your car, you’re eligible for medical payments. It’s often used to cover someone’s deductible before their health insurance kicks in.

• Rental car costs: If your car is being fixed in the shop because of a covered accident, then this coverage will pay for you to rent a car. It’s typically limited to both a daily amount and a maximum amount, such as $30/day with a maximum payout of $900.

• Roadside assistance: The insurance company will often have a contract with a roadside assistance company, who can come out and help you if you get stranded on the road. Most expenses are covered for free, though each company has slightly different guidelines.

• Towing expense: This is different from roadside assistance because it will only reimburse you for towing expenses. It won’t provide the towing service or a phone number to call, it will simply reimburse you for the expenses that it cost.

• GAP coverage: If you have a claim on your own vehicle, the insurance company will pay you its current market value. Since cars depreciate so quickly, its current market value could be much less than what you still owe on it. GAP coverage will pay the difference between what you receive for your car and what you still owe on your loan.

• New car replacement cost: An alternative to GAP coverage, this will pay to fully replace your vehicle with the latest model. This means you could actually get a newer car than what you currently drive. This coverage is typically only available on brand new cars anyway, meaning you bought it new and are the first owner.

The average cost of auto insurance in the United States is around $1,300 a year, or about $110 a month. However, that number is the average cost across the entire country, meaning it takes into account rates in expensive states like Michigan and California along with rates in cheaper states like South Dakota and Missouri.

Auto  insurance rates are mainly based on:

• Age: Younger drivers under the age of 25 pay the highest rates, mainly because that age group gets into the largest number of accidents.

• Location: City drivers pay more than rural drivers due to the increased likelihood of having a claim (traffic jams, thefts, stop-and-go driving).

• Gender: Female drivers have lower rates than male drivers due to their better driving records.

• Driving history: Your own driving history plays a large role. If you’re a safe driver, you’ll have fairly low rates for your vehicle type and location.

• Type of vehicle: The more expensive the vehicle, the more it will cost to insure because the insurance company will have to pay more money to replace it. Pickup trucks are among the most expensive vehicles to insure because they are involved in more accidents and can cause more damage.

• Current insurance: Some insurance companies require you to have a current policy in force before they will insure you. If you don’t have prior insurance or have a long lapse in coverage, your options will be more limited and you’ll likely pay higher rates.

• Credit score: Credit scoring may not stick around as it’s being reviewed by state legislatures as an insurance rating tool at the time of this writing. But most states still use it as a rating factor, with better credit scores leading to lower rates.

A deductible is the amount you’re responsible for in the event of a covered loss. In most covered loss cases, you are responsible for any amounts up to your deductible level and your insurance would cover anything beyond that up to your coverage limit. For example, if you select a $1,000 deductible and have a $4,200 covered loss, you would receive a claim payment of $3,200 after deducting the $1,000.

A deductible applies to each claim. If you have more than one claim in a policy period, you will be responsible for the deductible amount for each individual claim regardless of the number of claims you have during that policy period.

If you select a higher deductible, you will be responsible for paying more out of pocket. However, you’ll typically pay a lower policy premium. The opposite is true if you select a lower deductible option: because the insurer will pay a larger portion of any loss, you’ll typically pay a higher policy premium.

When you buy a new auto insurance policy, you’ll be asked to list all the drivers who should be on your policy. This typically includes anyone living in your household.

You’ll definitely want to include any vehicle that is titled and could be driven. Auto insurance primarily follows the car, not the driver. If you get pulled over by the police, they are looking to see if that vehicle is insured, not if the person driving the vehicle is on the policy or not. As far as insurance, the police only want to see if the vehicle is covered by an active insurance policy.

You can let anybody drive your vehicle and they will be covered under your policy. But insurance companies want you to list anyone who has regular access to your vehicle as a driver.

If you knowingly omit a driver, such as your teenage driver who just got their license because you know your rates will spike, you could be risking having your claim denied by the insurance company.

Collision is defined as losses you incur when your automobile collides with another car or object. For example, if you hit a car in a parking lot, the damages to your car will be paid under your collision coverage.

Comprehensive provides coverage for most other direct physical damage losses you could incur, including theft. For example, damage to your car from a hailstorm will be covered under your comprehensive coverage.

Most insurance companies offer more discounts on auto insurance than any other type of insurance. Each company offers slightly different discounts, but some of the most common ones include:

• Multi-policy: Almost every insurance company offers a multi-policy discount, which knocks off 10% to 20% when you bundle your auto insurance with a homeowners or renters policy.

• Multi-vehicle: If you have more than one vehicle on your policy, you’ll likely receive this discount, which makes each vehicle in a household slightly less expensive to insure than it would be if it was the only vehicle on the policy.

• Vehicle safety features: Most new vehicles have advanced safety features, such as passive or active restraints and blind spot monitoring. Each vehicle that has these is eligible for these discounts.

• Safe driving record: Insurance companies like to minimize risk, and having a safe driving record is a big indicator that you’re likely to keep your driving record clean. Companies typically look back between three and five years at your record, but this can be one of the larger discounts available.

• Good student discount: Having teen or early 20s drivers on your policy can have a dramatic impact on your rates. To help offset part of this, your child could receive a good student discount if they earned at least a B average last semester.

• Defensive driving course: Anyone is eligible for a defensive driving discount, but this can be particularly attractive to people who don’t qualify for a safe driving discount. Enroll and complete an approved online defensive driving course and receive a discount.

• Telematics: Not every insurer offers this, but enrolling in your company’s telematics program could save you extra money. Telematics is the program that tracks certain aspects of your driving for a period of months and gives you a discount based on how you drive.

There are usually many more discounts available, such as paying for your policy in full, enrolling in automatic payments, quoting well ahead of time, going paperless, etc. Be sure to talk with an independent insurance agent to find out which discounts you qualify for.

The main thing to watch out for when buying auto insurance online is understanding what each coverage option is and resisting the temptation to just buy the cheapest possible insurance. There’s a difference between having an affordable, competitively priced auto insurance policy with simply having the cheapest policy possible.

Oftentimes, the cheapest insurance will mean buying only the state minimum liability limits with no other types of coverage. Or having both collision and comprehensive coverage on your policy is expensive, you might be tempted to save money elsewhere, such as on your liability coverage.

Buying the state minimum liability limits can be very risky because it simply doesn’t cover you for much money if you’re responsible for an accident.

If you cause an accident and your insurance limits aren’t high enough to cover the other person’s injuries (or lawsuit costs if there’s a death involved), then you’ll be responsible for paying the rest of the money out of your own pocket. And if you don’t have that money laying around, your other assets could be taken, including your house, vehicle and a portion of your future earnings.

Liability is defined simply as legal responsibility for one’s acts or omissions. Liability insurance can cover people for things they neglect to do in addition to mistakes they make.

With regard to car insurance, liability is nearly always associated with a driver’s actions. If you cause an accident, whether by driving aggressively, running a red light or not paying attention, you are responsible – or liable – for that accident.

If you cause an accident or cause injury to another person or their property with your vehicle, your liability insurance will help to cover your legal obligation, up to the limits of your policy.

There are two types of legal obligation:

Bodily injury liability: If you cause an accident that harms another person, your liability coverage will pay for “pain and suffering” claims, medical expenses including hospitalization and surgery, and even lost wages for the injured parties, up to your policy limits. Bodily injury liability typically has two limits: one for each person injured, and one for the total injury costs of the accident.

Property damage liability: If you cause an accident that damages or destroys another person’s car or truck, your liability insurance will pay for the repairs to the other driver’s vehicle, up to your property damage limit. Likewise, if you run into a building or drive into a hedge, your property damage liability coverage will cover the costs of replacing or repairing the damaged items.

Liability insurance also helps to cover the costs of lawsuits arising from an accident. If an injured driver or passenger files a lawsuit against you, your liability insurance will help to pay for your legal defense. Note that you will probably need legal defense in court, whether or not you are found at fault for the damage.

Your auto liability insurance coverage will typically have three limits: bodily injury for each person, bodily injury for all persons involved, and property damage. Your insurance company will pay up to that established limit. If costs exceed your limit, you will have to pay out of pocket.

If you have a 30/60/15 policy, this means your insurance company will pay up to $30,000 for one person’s bodily injury costs, up to $60,000 for all bodily injuries in the accident, and up to $15,000 for property damage.

Note that some insurance companies issue “single limit” liability policies, instead of split limit policies. A single limit policy would cover the costs of injuries and property damage together, up to the total limit.

For example, a 300 policy would cover $300,000 of bodily injury and property damage liability combined after an accident.

If you cause a crash in which people are injured and the other vehicle is damaged or totaled, here is how your insurance will pay the costs if you have a 30/60/15 split limit policy:

• Your liability insurance will pay up to $30,000 for any one injured person, including hospitalization, treatment and lost wages.
• It will pay up to $60,000 for all injury costs if multiple people are injured.
• It will pay up to $15,000 for all property damage you cause.

If the total costs of the accident amount to $100,000 for all injuries and lost wages, and $20,000 in property damage, the out-of-pocket costs you will be responsible to pay are:

• $40,000 in bodily injury costs
• $5,000 in property damage costs
• Totaling $45,000 out of pocket

Based on your policy, you would have to pay $45,000 in out-of-pocket costs to cover your legal responsibility.

Unfortunately, many people purchase only the minimum liability coverage required by their state, leaving them exposed to enormous expenses if they cause an accident. Be sure to talk with your agent about the appropriate amount of liability coverage for your financial protection.

You may also want to consider an “umbrella policy,” which can provide excess liability coverage that can protect you if your legal responsibility in an accident far exceeds your auto liability coverage limits.

Business insurance includes a broad range of policy options designed to protect businesses from financial loss. Every commercial operation has its own unique set of risks, which means a commercial insurance policy must be tailored to the business.

Many factors, from the size of your company, to the number of workers you employ, the materials they handle, and whether you have business vehicles, will determine the specific coverage you need to mitigate risk and protect your company’s financials.

Many business owners find that they must turn to a number of different insurance companies to get all of the coverage needed to cover their risks. If you work with an independent agent like those at Allen Insurance and Financial, you can get all of your business insurance policies from one office.

Business insurance coverage for a commercial operation can include the following and more:

• General liability insurance: Covers third-party liability claims for injuries to other people.
• Professional liability and malpractice insurance: Covers professionals against loss due to negligent professional duty, wrongful acts, and advice and services that lead to another person’s loss or injury.
• Product liability insurance: Covers against faulty products and damage, illness, injury or death that may occur from using a faulty product.
• Property insurance: Covers loss and damage to your commercial business property due to fires, storms and other causes.
• Commercial vehicle insurance: Covers commercial vehicles and drivers for collision, liability, property damage, personal injury and comprehensive coverage (also known as “other than collision”).
• Workers’ compensation: Covers your employees if they get ill or are injured while working on the job.
• Loss of income: Covers your business expenses, such as rent and employee wages, if you can’t operate your business.
• Key person insurance: Covers loss of income that may result from the head of the business or other key personnel becoming incapacitated or passing away (also known as key man insurance).
• Cybercrime insurance: Provides protection for risks due to Internet use and online communications.
• Records retention policies: Covers loss of important data and financial records.
• Specialty coverage: Insurance that covers various specific business risks, such as those of  landlords, farmers, and commercial operations that put on one-day events, such as seminars or concerts.

Business insurance is a contract between the insurance company and the business. The insurance company agrees to provide financial protection in the event of a specified loss in exchange for premium payments. 

At the time of a loss, the business will  file a claim. If a fire destroys a portion of the business premises, the company will file a claim against the property insurance policy.

An adjuster will assess the damage and process the claim. The company will then receive the appropriate amount of compensation for the loss, less any deductible.

There are many different scenarios with regard to business risk and how insurance claims are filed. If the incident is a loss suffered by a customer of the company, the injured party is likely to file a claim against the business’s liability policy.

How the claim is processed depends upon the size of the claim, whether the matter can be settled with an insurance payment, and if the claim results in a lawsuit.

A deductible is the amount you’re responsible for in the event of a covered loss. In most covered loss cases, you are responsible for any amounts up to your deductible level and your insurance would cover anything beyond that up to your coverage limit. For example, if you select a $1,000 deductible and have a $4,200 covered loss, you would receive a claim payment of $3,200 after deducting the $1,000.

A deductible applies to each claim. If you have more than one claim in a policy period, you will be responsible for the deductible amount for each individual claim regardless of the number of claims you have during that policy period.

Commercial property insurance is the type of business insurance that covers your business’s physical property, equipment, and possibly stock and inventory. Basically, it can cover your office building and nearly anything that’s inside it.

Commercial property insurance typically is part of something called a commercial package policy. A commercial package is made up of various types of commercial insurance, including commercial property, general liability, and could include other types of insurance as well.

It’s common to have both your commercial property insurance and your general liability insurance with the same company, which creates a package policy. However, this isn’t usually required and there are many insurance companies that will just insure your commercial property, while another company will insure your general liability.

General liability insurance, also known as commercial liability insurance, is a broad commercial insurance policy covering general liability exposures of a business.

General liability provides insurance protection for a company’s assets, financial obligations, legal defense, and any settlements or judgments awarded to an injured party. 

It may also include claims for copyright infringement, false or misleading advertising, or libel and slander. If a patron is injured in some way in the course of doing business with your company, your general liability insurance will provide coverage.

Allen Insurance and Financial recommends that all businesses have general liability coverage in place.

The cost of business insurance varies. A number of factors affect the cost, because it depends on the type of business and the types of coverage appropriate for that commercial operation.

A typical cost for  business insurance coverage is $200 per month. Cost also depends on the size of the business. A small, home-based business can often be adequately insured for less, while insurance for a large company with many employees and a wide range of business risks will cost substantially more.

The costs of business insurance can be reduced with effective risk management practices, and by comparing costs from several different insurance carriers.

An independent insurance agent who specializes in commercial insurance can help with this process, and can manage a company’s complete business insurance portfolio through one office.

Business insurance is tax-deductible, as long as the coverage is for the purpose of operating a business, profession, or a trade. Businesses may not deduct their business insurance premiums if the coverage is for the purpose of a self-insurance reserve fund or a loss of earning insurance policy. Consult your tax professional for advice.

Business insurance is required by law, but only under certain conditions. The following business insurance is required by law if it is applicable to your situation:

• Unemployment insurance: Applies to a business that has employees and may be obligated to pay unemployment insurance taxes under prescribed conditions. If these conditions are applicable to your business, then you must register your business with the state work force’s agency.
• Workers’ compensation insurance: If your business has employees, you are most likely legally obligated to carry workers’ compensation insurance, either on a self-insured basis or through a commercial insurance carrier or a state workers’ compensation program. Workers’ compensation laws vary by state.
• Professional liability insurance: Some states require specified professionals to carry insurance against professional liability.
• Disability insurance: Several states require that a business have partial wage replacement insurance coverage for eligible employees for non-work related injury or illness. These states are California, Hawaii, New Jersey, New York, Puerto Rico and Rhode Island.

Depending on the nature of your business and any insurance that you are legally obligated to carry, the following types of business insurance should be considered essential:

• General liability insurance: Coverage against accidents, injuries and negligence claims.
• Product liability insurance: Coverage against product defects.
• Professional liability insurance: Covers professionals against malpractice, negligence or errors.
• Commercial property insurance: Covers against damage to your business property, such as from a fire or a severe storm.
• Business interruption insurance: Protects your business if you are no longer able to conduct your business because of a loss.

Some businesses need specialty coverage for equipment, shipping and other risks. Because commercial insurance needs to be tailored to each business based on risks, it is critical to work with an agent, who will get to know your company and ensure that your coverage adequately protects your business investment.

If your business carries commercial crime/theft coverage, your business insurance will cover employee fraud and embezzlement.

There are several different forms of employee dishonesty coverage. You can purchase several types of fidelity bonds to protect the business in the event of dishonest acts by all employees, or by named employees.

In order for your business insurance to cover flood damage, your company must carry a separate flood insurance policy or endorsement. A typical commercial property insurance policy covers specific water damage situations but excludes flooding.

The wording and water damage exclusions vary from one insurance company to another. Be sure to review your policy carefully and discuss your specific risks and concerns with an independent insurance agent who can help you get the coverage you need.

Errors and omissions insurance (or E&O) is a form of professional liability insurance. It covers a business for services rendered that did not have the expected or promised results, or that result in a loss or personal injury suffered by the person receiving those services. It also covers situations where the individual or company failed to render services at all. Engineers, stockbrokers, accountants, insurance agents, and lawyers may be covered by E&O.

Malpractice insurance is also a form of professional liability insurance. Malpractice insurance covers healthcare professionals, physicians, dentists, pharmacists, and others.

A Business Owners Policy (BOP) is insurance that allows a business (that meet certain criteria) to combine coverage from multiple policies into one convenient package. BOPs are created for businesses that face similar risks and often appeal to small and medium-sized businesses. However, larger companies can purchase a commercial BOP package and customize it to fit their needs. These days, there’s a BOP for most mainstream businesses, from hair salons to hardware stores, which makes the process easier.

Business insurance covers lawsuits, as long as you have the appropriate business liability insurance for your situation and enough liability coverage to pay your legal costs.

To ensure that enough liability coverage is in place for extreme circumstances like a lawsuit that exceeds $1 million in damages, many businesses buy a commercial umbrella liability policy.

Certain liability exclusions also apply, such as if an injury or damage was expected, or was caused intentionally. Some policies also have something called a “workmanship” exclusion, and some exclude coverage of punitive damages.

Liability insurance is available in many different forms, including:

• General liability
• Professional liability, errors and omissions and malpractice
• Directors and officers liability
• Product liability
• Premises or property liability
• Employers’ liability
• Employment practices liability
• Environmental and pollution liability

Builders’ risk insurance is a policy that will help pay to repair, replace or recover the current value of a construction project. This includes a number of different claim types such as fires, theft, labor costs and natural disasters.

As a builder or building owner, having the proper builders’ risk policy in place could save your project and you thousands of dollars in expenses.

Finding the right local independent insurance agent that is experienced in the different types of builders’ risk policies is key to a project staying on track.

The majority of the time financing is involved in a building project and most financial lenders require a builders’ risk policy to be in place prior to any work being performed.

However, there is the off chance that the project is fully funded by either the builder or the building owner and no proof of builders’ risk insurance is required. Having it as part of your practice is a wise decision and usually an inexpensive one at that.

Every business needs insurance but policies can get pricey. Sometimes a BOP is less costly than individual policies which is why it’s appealing. Furthermore, if there is damage to your property or the property of others, employee theft, mechanical difficulties, or an everyday accident at your business that causes a loss of income, a BOP can keep you from having to close your doors as a result of the expenses related to the events.

Terrible things can happen if you don’t have a BOP:

• Financial ruin: Why risk paying out of pocket and possibly going bankrupt, when you could just pay for a BOP that is fairly inexpensive?
• Lawsuits: Legal issues can not only be costly, but they can also be very time-consuming, so one accident has the potential to bring down your business.
• Losing your stuff (or other people’s stuff): Recovering the costs of theft, damage to buildings or broken equipment could send your company into a downward spiral.

Your standard business needs a variety of liability and property insurance. Depending on your risks, you may have to purchase these policies individually or you may qualify for a BOP. BOPs provide most of this insurance coverage but under one package which makes it more affordable for businesses.

Your coverage under a BOP can include:

• Property: The building and its contents.
• Property of others: In case your business provides a service on property like a repair shop.
• Business interruption: Lost income and employee salaries while you rebuild after a disaster.
• General liability: For any time that you might be sued.
• Employee dishonesty coverage: In case an employee steals from you.

Other needs:

• Mechanical/machinery difficulties.
• Front store window replacement.
• Hired and non-owned autos (i.e., you don’t own a company car but employees are still driving for the job).
• Loss of valuable papers.

While the above coverage might be enough for your business, you may need additional coverages that are not covered by a BOP.

The following is NOT covered under a BOP: 

• Professional liability
• Auto insurance
• Workers’ compensation
• Health and disability insurance
• Flood and sewer back-up
• Cyber risk insurance
• Terrorism insurance

For each of the above, you’ll need separate insurance policies.

While a BOP is good for nearly any business, there are some businesses that have general lower risks and are well suited for a BOP. Insurance companies determine a business’s level of risk based on any claim history and conditions such as safety and health concerns, the likelihood of theft, burglary, or damage from a natural disaster, and business that are in high-risk industries. The lower the risk of your company the less complicated insurance coverage you need. This makes it convenient to go with a BOP.

The following businesses are good candidates for a BOP:

• Restaurants
• Retail stores
• Salons
• Professional services
• Pet groomers
• Veterinarians
• Caterers
• Coffeeshops
• Deli
• Auto repair shops
• Florists

For companies in high-risk industries like agriculture, mining, construction, health care, gun shops and even computer stores, a BOP policy might not be the best fit. Companies that run high risks or are in unique industries require a specific insurance package and a certain amount of coverage. For these businesses, a BOP might not offer the coverage type or amount that your business needs.

A BOP is also not a good fit for a business that needs something that’s not offered within the policy, such as professional liability insurance. Businesses that usually need professional liability insurance include fitness trainers, photographers, beauty technicians and anyone who runs the risk of being sued by a client for not producing an adequate enough product. Since professional liability is not offered with a BOP and cannot be added to a BOP it wouldn’t be the best choice.

Your independent insurance agent can help you determine whether a BOP is a good choice for your business.

Business liability insurance protects your business in a variety of scenarios in which your company is negligent or causes harm to individuals or other businesses. Commercial general liability insurance (CGL) is the most important component of your business liability coverage. It is the first line of defense from lawsuits and liability claims against your business.

Any business owner, no matter how many precautions he or she takes, is at risk for liability claims. Liability claims can arise from injuries or property damage that occur on your business property, or those that are caused by you or your employees in the course of doing business.

CGL policies pay for attorney fees and any judgments that you might have to pay if you are sued, and also provide coverage for claims of libel, slander, copyright infringement, and false advertising.

That’s a lot of coverage! But CGL insurance still does not cover every type of liability exposure that you might have. Let’s just say that it covers the basics, but since every business is unique, you may need deeper liability protection depending upon the type of business you do and the risks you face. You may need additional commercial liability policies, or you may need to add endorsements to other insurance policies in order to cover all the bases.

While commercial general liability (CGL) coverage is quite comprehensive, not every type of business liability exposure is covered. After examining the exclusions, you might find gaps for which you have to purchase additional coverage.

Here are some of the most common CGL exclusions (not an exhaustive list).

Business owners can purchase other types of liability policies to fill any gaps that they have, or you can often add endorsements to your CGL policy for certain types of liability coverage.

Cyber liability insurance is a contract between a business and an insurance company where the insurer agrees to pay for expenses like fees, fines, lost income, and public relations (depending on coverage) to help the company recover from a number of threats and incidents.

If your company gets hacked, cyber liability insurance can help save you from a door-closing disaster in a number of ways which means it’s pretty important coverage to have. The only time we’d agree you don’t need cyber liability insurance is if you don’t keep any of your company or client’s information accessible via technology.

Some bad things that could happen:

Though hackers remain the number one cause for cyber insurance claims, there are a number of big threats out there that can happen at any time.

Fortunately, a cyber liability insurance policy can help protect your company against a big number of breach events.

Cyber liability insurance provides coverage for:

You’ve probably heard of auto gap insurance — a separate policy to cover the difference between what car insurance covers and what is still owed on the loan for a vehicle.

Employers liability insurance is purchased with the same thought in mind: to protect your business from costs resulting from employee claims that are not covered by workers’ compensation benefits.

It covers the gap between your company’s bottom line and lawsuits stemming from employee activities. Some insurance companies and state regulations even refer to employers liability insurance as “stopgap coverage.”

Your state, or the county in which you do business, may even require you to carry employers liability insurance. Which is why it’s important to work with an experienced insurance agent who is familiar with your industry, the area in which you do business, and any laws with which you must comply.

You may already have a professional liability policy, an EPLI policy (employment practices liability insurance), a general liability policy, and perhaps a host of other coverages to protect your business from liability risk exposures.

Do you really need another liability insurance policy? Yes. Not one of these products fills the gap between workers’ compensation and your revenues and assets, but employers liability insurance does.

As great as employers liability coverage is, it still doesn’t cover everything. It also contains exceptions, such as:

Many businesses owners are under the misconception that any employee injury on the job is covered by their workers’ compensation benefits. In reality, there are several exceptions that aren’t. However, they are covered by employers liability, like:

• Third-party countersuits. Say an employee is injured due to equipment malfunction while operating a forklift. They file for workers’ compensation and your business is covered, right? What if they also sue the manufacturer of the forklift? The manufacturer’s lawyers will most likely bring a cross suit against your company, claiming the malfunction was due to improper maintenance. Workers’ compensation won’t help you fight that case, but employers liability insurance can step in.
• Loss of consortium. In most cases, an employee who receives benefits from a workers’ compensation claim can’t file a lawsuit against the employer. However, nothing prevents the spouse of the injured employee from filing a claim against your business asserting that they have suffered losses due to the injury. Employers liability insurance can pick up the tab for these types of claims.
• Dual capacity suits. These are lawsuits brought by an employee against the employer when the injury stems from a product manufactured by the employer. In such cases, the employer is liable, as both an employer and a manufacturer. Workers’ compensation can’t handle such complicated cases, but employers liability insurance can.
• Gross negligence claims. If one of your managers directs an employee to do something that the manager knows is dangerous and could result in an injury or worse, your business can be held liable, and workers’ compensation will not come to your aid. These are the most common type of employers liability claims and are commonly filed by spouses after a fatality where they believe the employer disregarded the employee’s safety.

Many policies have limits on what they will pay out on these claims. You can choose higher limits and pay slightly higher premiums, but rates are usually fairly cheap for an additional $1 million in coverage.

Or, to increase your limits, you may want to think about a commercial umbrella policy, which works above the employers liability coverage. Your agent can help steer you toward the right choice for you.

Employment practices liability insurance, commonly referred to as EPLI insurance, is specifically designed to protect employers from lawsuits brought by employees. It provides coverage for many situations that general liability insurance does not.

Even lawsuits that are thrown out of court or are won by your company are expensive, due to the high cost of securing legal defense. Therefore, this insurance coverage is very important as financial protection for your business enterprise.

Unless you have an EPLI policy, your business is not covered against employee lawsuits. According to an industry study, 6 out of 10 non-buyers of EPLI coverage mistakenly think they are protected under other policies.

If you are not carrying an EPLI policy, your business is not alone. A study done by Advisen found that only 23% of companies with fewer than 100 employees purchase EPLI insurance; that number is 34% for companies with 500-700 employee,s and 40% for businesses that employ over 1,000 people.

Employment practices liability insurance provides compensation for losses caused by employee lawsuits. All court costs and legal fees are included in coverage.  EPLI insurance protects your business from the following and more:

Also known as professional liability insurance, E&O covers lawsuits that arise from rendering negligent professional services or failing to perform professional duties. This coverage is typically recommended for lawyers, accountants, architects, engineers, IT companies, or any company where individuals provide a service to clients for a fee.

There are a variety of professional liability policies (E&O), each covering a different profession and the risks that they entail.

The policy itself will protect you financially from legal claims and lawsuits up to your selected policy limits in the event you make a mistake and advise or treat someone incorrectly.

There are a couple of different coverage types of professional liability insurance, based on what you do and provide to customers or clients.

• Malpractice insurance is coverage that’s specifically designed for medical professionals such as psychiatrists, podiatrists, and gynecologists. It protects against lawsuits that allege negligence or mistakes. If you work in the healthcare industry, malpractice insurance should be the first policy you obtain.
• Errors and omissions liability insurance is also known as E&O insurance is coverage that’s designed for those who provide advice or services such as lawyers, consultants, insurance agents, and architects. It protects against lawsuits that claim a financial loss occurred based on bad information or negligent advice.

A lawsuit in the professional industry is not unheard of and in fact very common. There are two kinds of professional liability policy coverage types:

• A claims-made policy must be in effect both when the lawsuit is filed and when the incident in the suit took place. This type of policy is the most common, and is usually less expensive.
• An occurrence policy covers any incident that takes place during the coverage period, even if the actual lawsuit is filed after the policy expiration. This type of policy provides more comprehensive coverage and is higher priced.