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Risk based capital or RBC, is used extensively in the financial services industry. When you as a small business owner are thinking about purchasing new small business insurance, you can borrow some of the technical tools that are used in calculating RBC.

  Just like in RBC where you look for opportunities for improvement. Likewise, when purchasing commercial general liability insurance coverage you can also look for opportunities for improvement. In the testing for RBC you can change the numbers to do what if scenarios. Doing what if scenarios in your insurance portfolio can also help you in predicting your total cost of insurance.

  •  First of all you will need to identify the major drivers;
  • and components which will factor into the pricing of your insurance portfolio. Such as your carrier, broker fees, sales, payrolls, and past claims.
  • Look for opportunities of improvement throughout this matrix.
  • Finally, you will be able to project the potential impact your company’s strategies will have and the affect it will have on your ability to obtain cheap business liability insurance in the market place.

 Risk based capital, RBC, protocols, can be helpful in predicting your total cost of insurance.

Below are some legal foundations and general scope of coverage and operations liability exposures. This area provides the basis for a typical small business insurance plan. When you as a business owner, compare a small business insurance plan in the marketplace, you need to make sure that these fundamental coverage are included in your proposal.

1. Premises liability coverage.

This basic building block coverage provides protection from accidents that occur on the premises that are owned, lease, or rented by that person or organization that is insured. The coverage are typically protection from claims that arise from bodily injury and property damage.

2. Operations liability coverage.

This provides coverage from accidents that away from the premises and they arise from an individual’s and or company’s ongoing operations or services away from the premises.

Premises and operations liability is usually based upon negligence, but can sometimes be based upon contractual liability or strict liability depending upon the situation. An individual and a Corporation can be exposed to the other liabilities that are as a result of operations from autos, aircraft, watercraft, employee liability, etc., which are unique and distinct from the premises and operations liability. There are other insurance policies provide protections for these exposures.

3. Exposures from products and completed operations.

The best small business insurance portfolio should also include coverage from your exposures of products and completed operations. A small business insurance plan would have gaping holes in their insurance protection without this coverage being included also.

This coverage provides protection from claims that arise out of the products that you sell or distribute. This coverage also provides protection from the services that you have completed and/or work that you have done for your customers. Claims usually arise from the manufacturer, or the distributor, or from the retail sales of your product. Depending upon the products that you manufacture or are selling, you may have increased liability exposures it depending if your products or covered under the strict liability provisions that are in place in most state statutes.

Getting the best small business insurance coverage in place can sometimes be a challenging task. If you compare your small business insurance proposals and specifically look for this type of coverage in the quotes, you can prevent gaps in coverage.

This coverage will provide protection if your product was defective and causes bodily injury and/or property damage to third parties. Sometimes the coverage can be extended to provide coverage if the product has become dangerous that has not yet caused bodily injury or property damage.

Completed operations coverage provides insurance protection from your legal responsibility on the services that you have a provided and/or that you have completed. If your workmanship, the parts, and/or the services that you have performed become defective and cause bodily injury or property damage, the completed operations liability coverage will provide the needed protection.

In summary, a small business insurance plan should include the premises liability, operations liability, products and completed operations liability coverage. These are foundational coverage that should be reviewed by you and/or your risk manager. This simple checklist can protect you from uncovered losses in the future.

If you are going to compare small business insurance proposals, the automobile liability exposures should be a part of this plan. Auto liability exposures typically deal with the ownership, use, or maintenance of automobiles. The use is more than just driving the vehicle. It also includes the loading and unloading of the auto.

The best small business insurance coverage will include some provision to at least cover automobile liability exposures. Auto liability is normally based upon negligence. Some states have no-fault laws which provide benefits to claimants without the need to prove fault.

Small business insurance packages will usually provide coverage for general liability, property, and auto liability. While you can ensure all of these coverage individually, it is almost always cheaper to insure them together as small business insurance packages.

In regards to auto liability, the employers are vicariously liable for the acts of their employees or volunteer workers within the scope of employment or volunteer work. Sometimes auto owners can be held liable for negligent entrustment. This would be a situation where you loan your automobile to a person who is unfit to drive. Some examples of this would be to loan your car to a child, someone who is drunk, or to an unlicensed person.

Some states hold the registered owner of the vehicle liable while there is negligent use by other parties if they have given permission to do so. Indeed in some cases, getting your permission to drive the auto will invoke liability for the registered owner. If you as the owner of the auto provide a car that is defective, this can also trigger negligence on your part.

The automobile liability coverage cover bodily injury and property damage that arise out of a covered accident. Upon injury coverage can provide protection from injuries to third parties in the other vehicles. Upon injury coverage can also be extended to cover bodily injury claims from passenger’s vehicle if you are found to be negligent. The property damage portion of the coverage would pay for all property damages to vehicles and any other property that was damaged in the accident, up to the limits that you purchase.

When you compare small business insurance coverage in proposals, it is important to have coverage for your auto liability exposures include. Most small business package policies only include the general liability and property coverage. Cost to have the auto liability coverage is generally less than $200 premium.

In summary, for less than a dollar a day you can normally add coverage to your insurance policy to provide the gap coverage from your auto liability exposures. Remember that a vehicle can compute liability to you even though you are not personally driving the auto. Also maintaining and fixing your auto can also create auto liability exposures during that process. Finally, the use and operation of the vehicle most certainly will create auto liability exposures that need to have coverage. The use and operation also includes the loading and unloading of your autos, your vans, and trucks. Negligence can be imputed from a variety of situations with regards to auto liability.

Your small business insurance quote should all include coverage for contractual liability. Contractual liability usually arises from any breach of a contract or some kind of hold harmless indemnity agreement. Not all carriers offer this coverage and there are many exclusions even if the coverage is issued.

  • Breach of contract
    . This typically is when you are someone within your company fails to produce some task that was promised. The claimant/plaintiff can bring damages against you for this breach of contract. They may also seek a remedy of specific performance which means that you could be required by the court to perform the task that was promised and you failed to perform. Usually general liability insurance does not cover these types of breaches. The appropriate insurance form to use for this type of breach would be a performance bond. Liability insurance for small business can be endorsed to cover contractual liability bodily injury or property damage claims. A general liability insurance policy will respond to these types of claims, if properly endorsed.
  • Hold harmless indemnity agreements. These agreements will obligate the indemintor to pay certain claims or losses that have been contractually assumed by the Indemnitee. The agreement to have these clauses creates liability for the Indemnity for contractual liability and normally the small business insurance providers will provide coverage for this exposure. Some states prohibit hold- harmless agreements and they are not enforceable in those states. The vast majority of the states will enforce the typical hold harmless indemnity agreement. The contractual liability coverage will sometimes require small-business workers compensation insurance that has both hold harmless indemnity agreements for jobs that you’re performing. Many times the insurance carriers will make a charge for providing this agreement in advance.

If you are required to have small-business errors and omissions insurance with a hold harmless indemnity agreement that can sometimes be problematic. Small business professional liability insurance is covering you as the individual and your company and its typically not extended even to cover others even if you agreed to a hold harmless indemnity agreement. Contractual liability agreements versus contractual liability insurance coverage can be worlds apart. While you as the client can, if you agree to, sign any contractual provisions that you so desire, that does not necessarily mean that the contractual liability coverage with your insurance policy will respond to each and every contract provision that you’re signing. There is normally very little charge with regards to premium for this coverage so it would behoove you as the client to make sure that you have this coverage included in your insurance portfolio.

Breach of contract and hold harmless indemnity agreements can both play an important part in your overall insurance coverage design; at the very least have them included in your small business insurance quote. If you know that normally breaches of contracts are not covered in your insurance program while hold harmless and indemnity agreements typically are covered can help you in the negotiating of all of your contracts. You can save money in the long run if you know where your coverage starts and stops.

Having a keen eye in reviewing and analyzing your quotes for general liability insurance can pay big dividends in making sure that you do not have coverage gaps. Below we will show you how to examine and analyze your proposals so that your general liability insurance cost does not get out of hand.

  • Point number one. Make sure that your commercial general liability insurance quote provides coverage both on premises and off premises for all of the products and services that you offer. In searching for an online general liability insurance quote this might difficult to do as normally online the information is usually bare minimum at best. If you have exposures of overseas and in other countries you do need to make sure that your coverage lines up with the requirements of your clients and/or vendors. Not having your coverage to extend to provide coverage for all of your operations will create gaps in coverage.
  • Point number two. The general liability insurance covers the named insured. Thus, it is very important that your policy is issued with all of your various owners, legal entities, and doing business as entities listed specifically on the policy. If there’s common ownership in all of these entities it is usually not necessary to list each and every one but if the ownership varies it is very important that each and every entity is specifically listed as a named insured. Failing to do so can create tremendous gaps in coverage.
  • Point number three. Your certificate holders also need to have the correct name and address listed on any and all certificates that are issued on your behalf. You might have contractually agreed to notifying your certificate holder and/or providing proof of coverage to your certificate holder within the contractual provisions between your clients and/or vendors. Failing to have your certificate holders properly endorsed onto your policy can create legal and contractual problems for you down the road. Taking the time to get the name and address correct for all of your certificate holders will help eliminate gaps in coverage down the road.
  • Point number four. Normally you get what you pay for with your free general liability insurance quotes so it is very important that you know exactly what coverages you are paying for. You need to make sure that the cost is associated with the coverage so that you can clearly see what you are paying for the help eliminate gaps in coverage.
  • Point number five. General liability insurance providers can come and go in and out of the marketplace. Making sure that you place your insurance with an insurance company that is stable and financially strong can help prevent a gap in coverage come claim time. Especially if the claim occurred several years in the past, if that insurance company no longer exists you are now self-insured for this claim. This can be a devastating gap in coverage.
    General liability insurance consultants that are competent in this field can help guide you in purchasing your insurance so that you do not have gaps in coverage.

General liability insurance cost is normally a very large part of your overhead expense for a small business. Knowing what to look for in your proposal can possibly help you in reducing your overall cost of insurance. Let’s look at three basic elements to look for.

  • Carrier. Your quotes for general liability insurance should include proposals from at least three different carriers/insurance companies. Some insurance companies are regional and some insurance companies are national in their scope of markets. Many times a regional insurance company tends to have lower pricing than that of national insurance company. Although, the national insurance companies tend to provide coverages in all 50 states as well as internationally. So, depending on the scope and breadth of products and services that you are offering you need to carefully consider what carrier you are getting a proposal from insurance from. If you’re getting an online general liability insurance quote that can become more difficult to get multiple carriers to quote your business. Besides choosing a regional or national carrier you need to also investigate the financial rating of the insurance company. Many of your clients and/or vendors will require highly rated insurance carriers as a requirement to doing business with them. Carrier selection is an important element of your commercial general liability insurance quote.
  • Coverages. As you get your free general liability insurance quotes it is important that you get detailed explanations of all coverages that are presented in the proposals. Sometimes when you’re getting your general liability insurance instant quote online there is little if any description of the coverages that are quoted. This is a key element that needs to be investigated thoroughly. While you might have found a very cheap quote online if the coverages are not what you need that you are basically paying for insurance coverage that is of no value to you. You need to investigate coverages so that you know what some of the basic elements of general liability coverage or so that you can readily identify the coverages you need in the proposal.
  • Cost. Most general liability insurance covers a multifaceted array of coverages. There can be substantial cost in having this broad type of coverage. General liability insurance providers will almost always issue this policy on an auditable basis. This means that the end of the year insurance company will do an audit as to your actual payroll, sales, receipts, rents, or in any other premium basis that they chose to use. You do not want to be faced with a very large audit, which means a large additional premium that you must pay, at the end of the year.

Carefully looking out for these three basic elements of every proposal, that being; carrier selection, coverage analysis, and the overall cost of the insurance, will go a long way in helping you obtain your goals for your small business insurance portfolio. You can easily investigate and learn more about coverages and carriers through some quick Internet investigation. The cost of insurance is usually a little more indirect and a little more difficult to dig into. General liability insurance consultants can sometimes help you fill that gap in knowledge.

Workers comp insurance can be one of the most expensive policies for a small business owner. Knowing how to get the best workers comp insurance rates can help reduce one of your biggest overhead expenses. Sometimes what can also add to your workers comp cost could be the inherent workers comp insurance fraud that is found in many industries. Let’s look at some historical numbers. It is not a matter of if but when you will buy workers comp insurance over the life of your business and having some basic understanding of workers compensation insurance coverage will help you in the long run.

Workers comp insurance laws vary by every state. Every state requires workers compensation insurance to be in place if you have employees. Most states have state workers comp insurance carriers that are quasi- public entities. You cannot purchase workers’ compensation from a private insurer in the 4 “monopolistic” states (North Dakota, Ohio, Washington, and Wyoming). The states’ laws do not allow it.

In California Corporate Officers of Private Corporations that own 100% of the Corporation are not covered by the Workers Compensation law but they may elect to be covered.

All other corporate ownership situations are covered and may not reject coverage. Corporate officers of a public corporation or officers of a private corporation that do not own 100% of the corporation are covered and may not reject coverage.

One way to get the best rate would be to get proposals from both the state and private insurance companies for workers compensation insurance. There are pros and cons for using either the state or private carrier.
For industries that utilize subcontractors, another way to cut cost would be to require a workers comp insurance waiver from your subs. Otherwise, if you do not do this you will be responsible to pay the premium for the workers compensation for all of your subs.

Employers workers comp insurance might be endorsed to cover your exposure for volunteer laborers. If you utilize interns and/or other volunteers your business having your workers compensation policy properly endorsed to provide coverage for these exposures can protect you from having gaps in coverage.

Another way to save on your workers compensation insurance costs is in an indirect way by investigating the loss ratios of the companies you are getting proposals from. The last four years have seen a dramatic increase in the loss ratios for workers compensation insurance companies across the United States. Specifically in California, the overall workers compensation loss ratio in 2005 was 54%. In 2006 it had risen to 70% loss ratio. In 2007 again it increased to 93%. Finally, in 2008, the last year for which data is available, the overall loss ratio for workers compensation in California is 111%. Thus, if the companies you are getting proposals from have high loss ratios chances are you’re not going to get very competitive pricing. That is because the insurance companies need to over compensate for past losses in order to become profitable and sustainable in the marketplace.

Utilizing a few of these time-saving ideas can have a great impact on your bottom line.

Comparing General liability insurance quotes can be confusing proposition. Knowing what to look for in your business liability insurance quote can ease the stress in this buying process. Below are a few quick items to look for within the proposal or proposals that you will receive.

  • Carrier niche. Making sure that your commercial general liability insurance quote is presented from a carrier and/or carriers that specialize in your industry is an important part of obtaining a competitive proposal. If you are doing your own online general liability insurance quote it will be up to you to make sure that you read the various websites to make sure that the insurance company specializes in your industry.
  • Carrier rating. All insurance companies have financial ratings by several different financial institutions that specialize in rating insurance companies. Normally, you would not want to insure within an insurance company that has a rating below “A”. Most of your vendors in their insurance requirements will not permit you to do work with them if your insurance company has a substandard rating.
  • Classification. This one item will probably have the most impact on the pricing of your quote for general liability insurance. Making sure that the carrier has classified your business correctly not only affects the pricing but can also affect the coverages on your policy. If you have been misclassified and are enjoying a cheap price it may come to haunt you in the future if the carrier denies the claim because your operations are different than your classification.
  • Coverages. When obtaining your free general liability insurance quotes you need to insist on the explanation of coverages alongside the pricing. Coverages do vary from carrier to carrier and from state to state. Even though you are not paying for your free business general liability insurance quotes, you should still insist on a format of the proposal that it is easy for you to understand.
  • Gaps. Especially if you are obtaining a general liability insurance instant quote online you need to have some idea as to the coverages that your unique and specific business needs. If your business has liability exposures off your normal premises, making sure that your general liability policy covers your company off premise is extremely important. Liability insurance policies can be written to cover premises only or premises and off premises. Normally the on premises only coverage is described OL&T coverage. The more comprehensive liability policy for both on premise and off premise coverage is referred to as CGL coverage. Also, if you utilize independent contractors or subcontractors you need to make sure that your policy is properly endorsed to protect you from claims from those independent and subcontractor relationships.
  • Contractual liability. Many times throughout the course of business you will be asked to sign contractual agreements with your clients and/or vendors. You must realize that just because you are signing a contract, especially one with insurance provisions, does not mean that the insurance company will respond to all of your contractual agreements. You might in fact, be self insuring these exposures via your signature on a contract.

Looking for these six items in your general liability insurance quote will go a long way in helping you obtain the pricing and coverages that you need.

A Small Business Insurance Quote probably should entail a commercial vehicle policy as part of your commercial vehicle insurance portfolio. Below is a brief summary of what you should look for when purchasing insurance for commercial vehicle insurance for your small business.

  • Liability limits. Usually should have the same automobile liability insurance limits as you have on your commercial small business policy. That typically would be $1 million in coverage. Although, you can go as low as $100,000, $300,000, or $500,000 in limits.
  • Hired/borrowed auto liability. This coverage is very important for the small business owner and that sometimes you might hire or rent a vehicle and this will provide liability coverage for that exposure. You could on occasion borrow someone’s auto or ask someone to run and errand on your behalf. The automobile insurance rates for this coverage are usually based upon the number of employees you have or your annual rental receipts.
  • Non-owned auto liability. This provides liability coverage for anyone using a car on your behalf that you do not own. Some automobile insurance companies do not provide this coverage, therefore you should make sure when placing your automobile coverage that you are with the carrier that will provide this needed coverage.
  • Medical payments. This coverage is provided for the passengers in your vehicle to pay for medical payments to persons in your vehicle for auto claims. Normally these limits are $5000 or $10,000 per coverage. There does not need to be legal liability in order for this coverage to kick in.
  • Uninsured motorist. This coverage allows you to collect from your own insurance company for bodily injury damages caused from a person who has no insurance. Normally these limits start at $100,000 and can go as high as $1 million in coverage.
  • Comprehensive coverage. This is coverage for physical damage to your personal auto for claims and losses that are accidents from almost anything that is not considered a collision. These would be such things as fire, theft, vandalism, or a broken windshield.
  • Collision coverage. This provides coverage to accidents where you collide into an object or some other object collides into your automobile.

When you are obtaining your automobile insurance quotes you need to be very clear in your mind as to which of the seven coverages you want insure for. There is a separate premium and rating charge for each of the seven coverages. Typically, the automobile liability will be the most expensive of the seven coverages. Making sure that you have the coverages that you desire with the limits that you need is important in putting together your automobile insurance policy for your small business.

Many automobile insurance companies will provide you with multi-policy discounts if you place your automobile insurance with the same company that you place your small business insurance policy with. Taking advantage of these discounts and being fully informed of what coverage and/or coverages you need, can help in reducing your total overall cost of insurance. Also, you normally are able to make one monthly payment for all of these policies if they are combined with just one insurance carrier.

Liability insurance, of all the insurance policies that are available, is the main policy that protects you from claims and losses from third parties. Most of all the other policies, such as the commercial property insurance, are targeted for your own personal assets. This could be property insurance for your real property, your personal contents, property of others, and your automobiles. The other policy that goes in conjunction with the business general liability insurance would be the umbrella liability insurance policy. The umbrella policy also provides protection against third-party claims and losses. The umbrella policy is an excess liability insurance policy which goes above and beyond your commercial general liability coverage.

Comprehensive general liability insurance, which is sometimes known by the abbreviation CGL, provides more broad coverage than does the stripped-down general liability policy known as OL&T. This stripped-down policy covers on premises claims and losses only and not of premises coverage. The abbreviation stands for owners, landlords, and payments. While sometimes you might not have a choice if your small business insurance is an a higher risk category from and insurance underwriting standpoint, it would be in your best interests to always purchase the commercial general liability policy versus the stripped-down OL&T policy. By not having of premises coverage you open yourself up to many more public liability insurance claims and losses that you may not have anticipated.

While there are scores of policies and hundreds of coverages available, starting with the commercial general liability insurance can provide peace of mind that you are looking for. Your property and other assets may be protected in many different ways besides insurance. Claims and losses from your liability exposure typically can normally only be covered by you securing the proper liability policy. Damages to your property and tangible assets can be easily calculated and the loss exposure anticipated. When it comes to general liability claims and losses there are theoretically no limit to the amount of damages that a third party can claim in a lawsuit brought within most of the United States of America.

The average price for a liability policy United States is typically around $500 per year. So for less than the cost of a tall mocha per day you as a small business owner can have over $1 million of liability insurance. Typically liability insurance is the last thing that is purchased before business owner enters into their leases and/or contracts. That can lead to purchasing the wrong type of coverages and/or paying too much for the type of coverages that you end up purchasing.

Commercial General Liability Insurance while it is one of many policies and coverages, it should be the first policy that you purchase when starting or opening your new small business. Making sure that you have the broaden CGL policy versus the stripped-down OL&T policy will go a long way in making sure you have little if any gaps in coverage. If you keep it all in perspective, paying on average about a $1.50 per day for your CGL policy it is an overhead cost that is well worth the minor expense.