5 Mistakes to Avoid When Purchasing Business Insurance

If you have a business here in the Triad area and you’re not carrying an adequate amount of quality business insurance, you’re running a huge risk. No matter what your business, whether it’s a small, home-based, one-person operation or a large enterprise employing lots of people, obtaining the proper level of business insurance should be first and foremost on your list of required items to ensure the health and success of your business. The reason is simple.

A single, unfortunate occurrence involving your business could literally wipe you out tomorrow and severely affect your financial well-being for the rest of your life. This is especially true for incidents involving a liability claim against your business, one of your employees or against you personally. Even something as seemingly innocuous as a slip-and-fall accident that ends up seriously injuring one of your customers – even someone who's simply visiting your home office for a consultation – could end up costing hundreds of thousands of dollars. Without adequate business insurance coverage in force, your business and even all of your personal assets are at risk.

Things to Consider

The first mistake you should avoid regarding the purchase of business insurance, as already mentioned, is to think you don’t need it or can’t afford it. Every business owner needs business insurance, without exception, and affording it is a small price to pay in exchange for the amount of protection against risk it provides. Here are some additional mistakes to avoid:

1. Don’t pick the wrong carrier. The best coverage will come from a top-name, A-rated company with a history of financial stability and fair claims payoffs..
2. Get the right type of protection for your type of business. Your business has unique needs and your policy should be custom designed to fit these. A dentist, for example, has different risk priorities than a retailer, although a certain overlap in some requirements will be present.
3. Too much protection is better than not enough. Your protection needs to cover all of your assets. An umbrella policy is a good option to ensure adequate protection.
4. Once a policy is in place don’t make the mistake of just leaving it as is forever. Coverage needs to be re-evaluated every year or two, or whenever major changes occur in the business.

Business insurance is incredibly important to have in place before something happens. If you wait, you’ll have waited too long.   

 

Contributory vs. Comparative Negligence Law

We often hear people ask who was “at fault” after an accident. In today’s complex world, there are rules and guidelines as to how this is determined. The insurance laws and regulations vary from state to state. In some states, regardless of who “caused” the accident, each person will pay for their own damage (whether through insurance or out of pocket). This is called a “no-fault” system or a “no-fault” state.

Alternatively, there is the “at-fault” system, which is the most common in the United States. Thirty-eight states, including North Carolina, utilize the at-fault or tort automobile insurance system, which says that the person found to be at fault for causing an automobile accident is responsible for paying the property damage and medical expenses of those individuals injured as a result of his/her negligence. Additional damages may also be levied for pain and suffering as well as for lost wages. In my opinion, the “at-fault” system allows for lower rates for the consumer as well as a strong incentive to maintain a good driving record.

Contributory vs. Comparative Negligence Law

While most states operate under what’s called a comparative negligence system, meaning those involved in a vehicle accident are assigned a percentage of fault attributable to the incident, six states, including North Carolina, operate under what’s called a “pure contributory negligence” system. Under this pure contributory setup, if you are deemed to have negligently contributed in any way toward a motor vehicle accident, you are not allowed by law to collect any compensation whatsoever from the other driver(s) for your injuries.


For this reason, it’s especially important when buying your car insurance coverage that you consider your needs very carefully. If you’re involved in a vehicle accident and determined to be at fault, you could be in big financial trouble if you are injured and require expensive medical treatment. Not being able to collect compensation from the other driver means you’re basically on your own, and without proper Medical Payments coverage (Med Pay) in force, your medical bills will have to be covered by your primary medical/health insurance coverage or come out of your pocket. The same goes for damage caused to your vehicle. Without collision car insurance in place, the cost of repairing or replacing your vehicle will fall to your available financial resources, which can represent a huge financial burden.

Motorcycle Insurance: 3 Things You Need to Know

North Carolina provides some great motorcycle riding country, and when the weather warms and you’re shaking off the remnants of winter’s cold, not much feels finer than to get out on the open road with your two-wheeler. Before you proceed, however, there are some things you’ll want to do to make sure everything on your machine is operational and safe and that you have the proper motorcycle insurance coverage in place, as well as proof of insurance in your possession.

If you’ve let your motorcycle insurance lapse during the non-riding season, which we don’t recommend, make sure it’s back in force before you’re tempted to take even just a little spin around the block. It’s the law. It’s also a good idea to protect yourself before something untoward and potentially life-threatening occurs.

Some Things You Should Know

In case you haven’t noticed, motorcycling can be a dangerous affair. Even if you’re the safest rider out there, there are others on the road, driving big, heavy trucks and cars, and your life is literally in their hands. Some motorists just don’t seem to see motorcyclists on the road clearly, so defensive driving is an absolute must when riding on two wheels. Even then, accidents happen, and when it’s you on your two-wheeler against a much heavier vehicle, the results can be disastrous. Having good, comprehensive insurance should be a prime concern. Here are some things to consider:

1. The State of North Carolina has the same minimum liability insurance requirements for motorcycles as for other vehicles – 30/60/25. This represents $30,000 liability coverage for bodily injury or death done to another person in an accident deemed your fault, $60,000 total coverage for all third-party injuries or deaths, and $25,000 liability coverage against any property damage you cause. These are bare minimums and may be unrealistically low coverage amounts in an actual accident. You may want to increase these amounts and add uninsured/underinsured motorist coverage.
2. Your liability insurance pays no benefits to you for your injuries or property damage, such as a damaged motorcycle. You should strongly consider adding Personal Injury Protection (PIP) and Collision Coverage to your basic policy.
3. Motorcycles are at high risk of being stolen – either whole or in parts. You need comprehensive coverage to protect your loss stemming from theft, vandalism or other-than-collision damage.

Always wear protective clothing and ride sensibly. Your safety depends on it.     

Homeowners Insurance Vs. Mortgage Insurance: What's the Difference?

Most folks purchasing homes here in the Greensboro/High Point areas don’t just buy them outright but, rather, finance at least a portion through a bank or other loan provider. Because of this, lenders require a means of protecting their risk exposure in the event that something happens, such as a default on payments due to the death or incapacitating illness of the mortgagee. The lender is also exposed to risk due to various perils that could affect the home, such as fire, storm damage or other types of incidents that would lower or even totally wipe out the value of the home against which a mortgage loan has been obtained. There are a couple of risk-mitigating options available.

Homeowners Insurance Vs. Mortgage Insurance

While many may wrongly assume that homeowners insurance and mortgage insurance are the same or similar, the fact is, mortgage insurance is designed to protect the lender and does nothing to protect you, the homeowner. Homeowners insurance, on the other hand, provides protection for both the lender and the homeowner. Here are the specifics:

Mortgage insurance is typically required by lenders if, when purchasing your home, you put less than 20% in as an initial down payment. This type of insurance protection covers the dollar amount remaining on a home mortgage in the event of a default. If, for example, you’re unable to work as a result of an illness or injury and default on your home loan payments, the remaining balance would be paid to the lender. Premium payments for mortgage insurance are made by the homeowner and are typically rolled into the monthly mortgage payments. A major benefit of this type of coverage is that it allows prospective homeowners the ability to buy a home with a lower initial down payment.

Homeowners Insurance

As the name implies, homeowners insurance is designed for protecting the homeowner against the risk of loss from a long list of potential perils. These include everything from storm damage and fire to burglary, vandalism, theft, civil disturbances, explosions, damage from vehicles, airplanes and more. It covers both your home structure and the possessions found within. It may even cover personal possessions stolen or damaged while not actually in the home.

Homeowners coverage has many options, and a policy can be designed to fit your specific needs. It also protects your lender’s financial interests in situations involving structural damage or loss.

RV Insurance: How Does it Work?

Here in North Carolina, recreational vehicles are very popular and, while the term RV usually evokes the image of large motor coaches rolling down the road or parked at a scenic campground, it can mean many things. Recreational vehicles include all types of motorhomes, from small pop-top camper vans and bus conversions to Class A, B and C motor coaches. Other types of RVs could include boats, all-terrain vehicles and even golf carts.

Who Needs Protection?

All of the aforementioned vehicles pose a certain amount of risk to the driver/owner. For this reason, they should be covered by sufficient insurance to prevent the suffering of financial losses that become your personal responsibility. North Carolina, like all other states, require that motor vehicles driven on public roads be covered by a minimum amount of state-mandated liability coverage. Just as with your car insurance, RV liability coverage pays “the other guy” when you’re involved in an accident shown to be your fault. However, just like car insurance, options exist whereby you can add coverage that reimburses you for losses resulting from a collision (collision coverage) or from non-collision caused losses, such as theft, vandalism, fire, storm damage and more (comprehensive coverage).

Why RV Insurance is Unique

Many RVs are large, difficult-to-drive vehicles more likely to be involved in accidents that cause a great deal of damage to other individuals and their property. For this reason, often the claim dollar limits are higher than for regular car insurance. In addition, RVs often contain a great deal of items, including appliances and any number of personal items.

Even if you only use your RV occasionally, or for a few months a year, you need to carry coverage year-round, especially the comprehensive coverage that protects against losses from non-collision incidents. Another consideration applies to those individuals who live in their RVs as a substitute for conventional homes. In these cases, some provisions of RV insurance will more closely resemble a typical homeowner’s insurance policy.

While basic liability insurance is required by law if your RV is licensed for the road, if you’ve purchased your vehicle through a bank or other financial institution, it will want collision and comprehensive coverage to protect its financial interests. Your local insurance broker can clearly explain everything you should have.  

Is it Time to Update Your Business Insurance Policy?

Business insurance is all about shielding yourself and your business from potential liabilities deemed your responsibility and the sharing of that risk, in exchange for a specific amount of premium dollars, with your insurance carrier. Your portion of this risk-sharing is a deductible amount, if required, should a claim against the policy be filed. If the dollar loss of a particular claim exceeds your policy limits, you’ll also be responsible for any amounts in excess of those limits.

Where to Start

From the day your business opens its doors, you become exposed to risks. One lawsuit or catastrophic event can basically wipe you out in the blink of an eye. A large liability judgment against you could actually spell financial disaster, which is exactly why good business insurance is a must. Fortunately, there is business insurance coverage for just about every conceivable risk you face. Each business insurance policy will basically be a custom-designed contract drawn up to fit your specific insurance needs. You should consult with your local broker here in the Triad area to determine what you need.

The Big Three

The top three types of business coverage most commonly sold here in North Carolina are all coverages against potential liabilities. They include:

• General Liability – protects against losses suffered as a result of accidents, injuries or negligence claims. Payments may be made toward losses from bodily injury, medical expenses, property damage, slander, libel or to help cover the costs of defending yourself in a lawsuit.
• Professional Liability – also known as E&O (errors and omissions) insurance, this coverage protects against negligence claims arising from failure to perform or from mistakes made, including malpractice, while in the service of clients.
• Product Liability – protects against losses suffered as a result of a defective product that your company manufactured, wholesaled, retailed or otherwise distributed.

Your other major business insurance need is for property insurance. This coverage is similar to your homeowner’s insurance. It covers everything related to the damage or loss of company property. This typically includes perils, such as fire/smoke damage, storm damage and vandalism, and may include a broad range of other coverage, such as loss of income, business interruption and more. While you may have all or most of this coverage already in place, it's a good idea to revisit policy limits, premium and deductible amounts regularly. How long has it been since yours was assessed?