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Since Title VII of the Civil Rights Act of 1964 passed, the issue of employees’ rights continues to be controversial. Employers involved in interstate commerce are prohibited from discriminating against applicants.

Understanding How Fast Lawsuit Risks Are Increasing

As more laws are enacted for workplaces, employers face a higher risk of lawsuits. The likelihood of discrimination lawsuits is especially high. In order to minimize this risk, employers need to create a workplace that offers workers equal rights, opportunities, job access, working conditions, job security and opportunities for advancement. They must also strive to create a workplace that is in compliance with federal employment guidelines for mature and disabled workers. During the time period between 1992 and 2004, the number of individual discrimination charges jumped from 72,302 to 79,432 annually. These figures, which were collected by the Equal Employment Opportunity Commission, include all types of discrimination filings.

The 2010 Wal-Mart Example

Claims of workplace discrimination hit a record high in 2010. The total number of claims was 99,922 during the fiscal year. This number gained national attention after the story of a class-action discrimination lawsuit was filed against Wal-Mart. The U.S. Supreme Court threw out the case. This case stated that over 1.5 million female workers faced workplace discrimination in the aspects of pay and promotions. The Court ruled that the case couldn’t continue because of the varied circumstances of the plaintiffs, which lacked uniformity. This was the most high-profile employee discrimination case of 2010. It was also the largest class-action lawsuit in U.S. history.

The Small Business Perspective

Wal-Mart had a policy against uniform employment practices. Since duties were delegated to individuals in specific branch locations, the case was overthrown. Smaller companies need to take the examples of larger companies by ensuring that they’re properly protected from such lawsuits. On a smaller scale, discrimination lawsuits could devastate or bankrupt a small business. When employers have more personnel policies in place, there are fewer lawsuits filed. This is especially true if the policies are outlined well in a handbook and given to new employees. Educating new employees thoroughly is important. It’s also essential to fully educate employees who already work for the company at the time such changes are made. However, even if the law is carefully interpreted, there are still times when employees may allege discrimination. During such times, employers are always thankful and reassured that they possess Employment Practices Liability Insurance. This coverage is commonly referred to as EPLI.

Importance Of Employment Practices Liability Insurance

Most people aren’t aware just how important this type of coverage is. The importance of it can be discovered by carefully examining the workplace. Most workplaces have an ethnic and racial composition that is constantly changing and evolving. In addition to workplaces, the entire country is changing because of this factor. Cultural aspects have become one of the most common roots of discrimination cases. Although America is known for high levels of educated workers, discrimination continues to thrive among employees. They’re taught in college to tolerate and accept other cultures. However, exercising equal treatment in the workplace seems to be a problem for many. In addition to this, sexual harassment, handicap bias actions and age discrimination lawsuits are common. Workplaces facing these issues are finding themselves in serious legal trouble.

The Solutions

In order to avoid legal battles, it’s important to have EPLI. Although many employers think it’s too expensive, it may save a company from going under if a lawsuit is filed. Have a professional perform a risk assessment to determine how much insurance is needed. In addition to having ample coverage, it’s important to implement policies in the workplace that encourage equality and discourage discrimination. Information needs to be made available to workers to make them aware of what discrimination is and how to avoid it. Encourage workers to treat one another with equal and mutual respect. The press and human rights organizations are becoming more vigilant about spotting discrimination in multinational companies. With so many scrutinizing eyes watching, it’s important to regularly assess the workplace to ensure that discrimination risks are low. Educate executives on proper hiring, firing and disciplinary guidelines. It’s important to ensure that the executives won’t be a liability.

There are two factors that have been blamed for the rising number of lawsuits. First, employees being educated about their discrimination rights is resulting in them understanding and standing up for those rights. In addition to this, the financial hardships people are experiencing from the recession are making them desperate enough to file claims that aren’t legitimate. Regardless of whether claims are legitimate or not, it’s essential to have EPLI to protect the business.

Let us help you make informed decision about your business insurance needs.  Our licensed agents specialize in helping small businesses obtain the best coverage at the best price, give us a call today at 888-834-8619.

The post Does Your Business Need Employment Practices Liability Coverage? appeared first on Small Business Quote.

To ensure the survival of a company, business interruption insurance is a valuable tool. Although some companies may never use it, having this coverage can be the difference of recovering from a detrimental event or closing the doors forever. Business interruption coverage is just as important for any business as flood insurance is for an oceanfront business. Most people would never start a company without insuring their property and inventory from storms, vandals and perils.

Fires, mold, floods and even injury lawsuits may cause a business to close its doors temporarily, and the building or machinery may be unusable for some time. Business interruption insurance is added to a property insurance policy. After any type of disaster, shutting down the business costs the company a considerable amount of money in lost revenue each day. When this happens, customers start going to competitors. In some instances, they may be less likely to return even if the business reopens in a timely manner and offers incentives for returning.

Business interruption insurance covers any lost income if the company must shut down the building. Estimated earned revenue is based on average calculations that use the past year’s financial records. Also, this type of insurance covers expenses that still exist without operations continuing. For example, the electricity may be left on, and that would be covered.

When adding business interruption insurance to a property policy, be sure that the limits are enough to cover the company’s expenses for at least a week or more. This amount may need to be adjusted each year for a new and growing business. Many people make the mistake of buying insurance for an inadequate time period. In some cases, it takes a few weeks to resume operations. In most cases, business interruption coverage does not start until 48 hours after the business shuts down.

The cost of business interruption coverage depends on the nature and location of the business. For example, a real estate business located in an area that receives plenty of rain would cost less to insure than a restaurant that is located in a known fire risk zone. The added risk of ovens and stoves would increase the cost further. Also, insurers consider how easily a business could operate elsewhere. While the real estate company may be able to work from a temporary office location, the restaurant would not be able to easily resume offsite operations.

There is also coverage for extra expenses. This type of insurance reimburses a company for the amount of money spent that exceeds average operating costs. If it helps lower business interruption costs, extra expenses coverage will be paid in most instances. For some people, extra expenses coverage by itself may be sufficient instead of business interruption insurance. However, this only applies to businesses with workers who can work from home, at a library or at another location. 

Let us help you make informed decision about your business insurance needs.  Our licensed agents specialize in helping small businesses obtain the best coverage at the best price, give us a call today at 888-834-8619.

The post Why Business Interruption Insurance Is Important appeared first on Small Business Quote.

Companies that design or sell tangible items should consider product liability insurance. Anything from foam slippers to boxed macaroni can be manufactured incorrectly enough to result in lawsuits. Some food products become contaminated and make people sick. Other items may be designed poorly and cause physical harm to customers or their personal property. Product liability insurance is an add-on coverage for a general liability policy.

Purchasing Considerations

When buying product liability coverage, it is important to think about what could go wrong with products. If the item is known to be a danger, more coverage may be necessary. People who sell packaged food products should always purchase a generous product liability policy. These are some factors to consider when assessing items:

• Packaging, assembly parts and accessories that may be part of a larger product.
• Warnings, directions and possibly misleading wording.
• Investor, partner and affiliate relationships that may be affected.

Preparing For A Recall

Recalls are costly and confusing. Also, they can cause further financial loss if they hurt the company’s reputation. Recall coverage can be purchased separately from product liability insurance. It can be beneficial for any type or size of product. This insurance covers everything from refunds to reestablishment of a brand.

Although recalls are rare for some types of businesses, the frequency of these events is increasing. Since consumers and government agencies demand higher standards every year, more companies are at risk. If a recall is widespread enough or is focused on a company’s main or only product, it can be financially devastating enough to end the business forever. These are some coverage benefits of product recall insurance:

• Shipping costs for returned products.
• Reimbursement of costs related to business interruption.
• Costs related to destroying unusable inventory and returned goods.
• Communication costs to spread information about the recall.
• Replacement of faulty or unusable products.
• Reputation management or repair costs.
• Retailer, wholesaler and distributor fees that were lost.

Contamination Insurance

Pharmaceuticals, cosmetics and food may be inadvertently or purposely contaminated. Companies that sell these products should purchase contamination insurance in addition to product liability and recall coverage. Contamination rates are increasing across the United States, and many are due to criminal activity. Damage control and reputation repair are the two biggest costs associated with contamination. This valuable add-on insurance covers the following:

• Product transportation and laboratory analysis for establishing a recall.
• Costs to advertise about the recall through multiple media outlets.
• Loss of profits for up to 18 months.
• Recall expenses for related third parties.
• Rehabilitative expenses for the company.
• Consulting, public relations and crisis response costs.
• The value of all contaminated products sold and remaining inventory.
• Increased operative costs related to the recall.

Some policies may also include government recall and adverse publicity. If the policy does not specifically cover these items, they may be added on for an extra cost. Most policies cover extortion costs when applicable. Know more about these important insurance from your insurance agent.

Let us help you make informed decision about your business insurance needs.  Our licensed agents specialize in helping small businesses obtain the best coverage at the best price, give us a call today at 888-834-8619.

The post Why Businesses Need Product Liability, Recall and Contamination Insurance appeared first on Small Business Quote.

A study by the U.S. Green Building Council estimated that environmentally-friendly, or “green” construction, would grow at a compound annual rate of 9.5 percent between 2014 and 2019. Traditional property insurance products do not adequately cover these innovative construction methods and materials. In recent years, the insurance industry has unveiled new coverages to help cover environmentally-friendly buildings and property.

The Insurance Services Office (ISO), which publishes standard coverage forms used by many insurance companies, developed a policy change form that covers the increased costs of green upgrades and related expenses. It defines “green” as enhanced energy efficiency or the use of “environmentally-preferable, sustainable” materials, products and methods in design, construction, manufacture or operation. Something is green only if recognized as such by a “Green standards-setter,” which can be a private organization or government agency. The Leadership in Energy and Environmental Design (LEED®) program of the U.S. Green Building Council and the Energy Star program of the federal government are examples of Green standards-setters.

The form contains fields for entering the maximum amount of coverage that will apply to green upgrades for both buildings and personal property. It also has a field for entering an “Increased Cost of Loss percentage”. If a loss occurs, the insurance company calculates the cost of repairing or replacing without green upgrades (before subtracting the deductible) and multiplies that amount by the Increased Cost of Loss percentage.  The insurer will then pay either the actual cost of repairing or replacing; the result of multiplying the loss by the percentage; or the maximum amount shown on the form, whichever is least.

The form also covers expenses such as waste reduction and recycling; design and engineering professional fees; certification fees and equipment testing; and the costs of flushing air out of the building and related air quality testing.

The American Association of Insurance Services (AAIS), a competing publisher of standard forms, offers a product that covers:

• Green buildings, so that they can be restored to standards required for certification. Covered costs include restoration of air quality; debris recycling; recertification; vegetative roofs; and replacement of water and electricity lost when onsite renewable energy generators or water conservation equipment are damaged.
• Upgrades to non-green buildings and personal property so that they can meet certification standards after a loss.
• Lost income when using green construction lengthens the time a business is shut down after a loss. Lost income from damage to renewable energy systems that provide power to public utilities is also covered.

Rather than using a formula to calculate the available amount of insurance, this form lets the property owner choose the coverage amounts.

Some insurance companies have developed their own green coverage products. They provide similar coverages with different arrangements for amounts of coverage. One provides 25 percent of the cost of the damaged property, up to amounts that vary by the policyholder’s needs.

Green construction is becoming more important to property owners. These new insurance products will enable them to pay the cost of erecting and repairing sustainable buildings.

Let us help you make informed decision about your business insurance needs.  Our licensed agents specialize in helping small businesses obtain the best coverage at the best price, give us a call today at 888-834-8619.

The post Get Insurance For Green Construction appeared first on Small Business Quote.

There are four types of insurance that most small businesses purchase. The first is property insurance. This type of coverage provides compensation if business property is damaged, stolen or lost. In addition to covering the physical business structure, property insurance covers personal property. This includes inventory, office furnishings, raw materials, computers, machinery and other items that are part of business operations. Property insurance coverage doesn’t end with protecting physical assets. It also affords operating funds when business owners must take steps to get their business back on track following major loss. Property insurance may provide coverage for broken equipment in some cases. It may also provide coverage for water damage, debris removal following a fire and several other specific items.

Business vehicle insurance is the second type of coverage many small businesses purchase. Anyone who uses their own personal vehicle for business purposes should discuss this type of coverage with their agent. Most personal vehicle insurance policies don’t provide coverage if the automobile that is involved in an accident is used mostly for business purposes. Business auto insurance policies afford coverage for vehicles that are owned and used by a business. Third parties injured by the policyholder’s vehicle receive compensation for damages up to the policy limit amount. Some policies may provide compensation for repair or replacement of vehicles that are damaged from flooding, theft, accidents and similar events.

The third type of coverage most small businesses purchase is liability insurance. This is because any business may face a lawsuit at some point in today’s litigious society. For example, a person may claim that a business caused them harm from a service error, defective product or negligence in providing a safe environment. Liability coverage provides compensation for damages a company is liable for. However, the coverage is only provided up to the policy’s limit amounts. These policies usually also provide funds for legal defense expenses, attorneys’ fees, medical bills and several other related expenses.

Workers compensation is the fourth type of insurance purchased by many small businesses. In nearly every state, employers are required by law to have workers compensation coverage if they have employees. This number usually varies from three to five, and even if a business has less than three employees, it is still wise to purchase this coverage. Workers compensation pays for a portion of lost wages for workers who are injured. In addition to this, it also covers the medical care they require. Coverage is provided to employees who are injured at work regardless of who is at fault. If workers die as a result of the injuries they sustain, the insurance company compensates the surviving family members of the deceased worker.

In addition to the four major types of coverage purchased, there are several other valuable policies some companies may want to purchase. Umbrella policies, terrorism coverage and specialized liability policies are all helpful. Umbrella policies, much like an umbrella, cover above and beyond the normal inclusions. These are usually obtained to prevent high losses by businesses with high risks. Specialized liability policies are made up of several types of individual coverage. It’s best to speak with an agent about these options. Terrorism coverage provides compensation for damages and medical care to a certain extent in the event of terrorism. To find out which options are best for an individual business, it’s best to speak with an agent. 

Let us help you make informed decision about your business insurance needs.  Our licensed agents specialize in helping small businesses obtain the best coverage at the best price, give us a call today at 888-834-8619.

The post What Types of Insurance Do You Need for Your Small Business? appeared first on Small Business Quote.

A consultant recommends that a client purchase and implement software to automate certain manufacturing processes. An update to the software causes it to crash repeatedly, forcing the client to shut down its production lines for 10 days until a fix is available. The client sues the consultant for giving bad advice.

A new commercial building develops a roof leak following heavy rains. An investigation shows that the roof structure is insufficient for handling torrential rains common to the area. The owner sues the architect over the design error.

An accountant performing an audit for a town government does not notice a questionable pattern of expenditures. Later, it is discovered that an employee in the town clerk’s office embezzled more than $15,000 over a six-year period. The town sues the accountant for failure to detect the crime.

These are situations that can happen to any professional, which is why experts in all fields need errors and omissions (E&O) liability insurance.

E&O insurance protects professionals against financial losses resulting from their liability for errors and omissions they may make while performing their duties. It applies to many different types of mistakes professionals can make, such as project delays, failure to provide services, oversights, incorrect documentation, mismanagement of assets, and others.

Commercial general liability (CGL) insurance applies to liability for bodily injuries, property damage, and certain types of non-physical injuries and advertisements. It does not cover the types of losses that E&O insurance covers. For example, it would not apply to the lost production resulting from the crashing software because the property is not physically damaged. E&O insurance, which covers faulty professional advice, would apply.

Most professional firms cannot afford to pay legal judgments and settlements out of pocket. An error that shuts down production lines or closes a building for long periods of time can cost the client tens or hundreds of thousands of dollars. The cost of compensating a client for such large amounts is more than most firms can absorb.

Even those professionals who do not think they will make mistakes can benefit from E&O insurance. If something goes wrong, a client may sue anyone who had any part in the project, even those who are blameless. In addition to paying for any judgments or settlements, E&O insurance covers the cost of providing a legal defense against the claim. Often, defense costs exceed the amount of the loss itself, especially if the attorneys succeed in getting the suit dismissed.

Another reason to purchase E&O insurance is that it may be difficult to get work without it. Some businesses and government entities require professionals they hire to carry it. Those who lack this coverage may not be permitted to bid on projects, or they may not be awarded projects on which they bid.

E&O insurance protects professionals against legitimate and frivolous lawsuits, fills gaps left by CGL insurance, helps them obtain work, and enables them to cover the costs of human mistakes. It is a smart purchase for every professional firm.

Let us help you make informed decision about your business insurance needs.  Our licensed agents specialize in helping small businesses obtain the best coverage at the best price, give us a call today at 888-834-8619.

The post If You’re a Professional, You Need Errors & Omissions Insurance appeared first on Small Business Quote.

Most of the big opportunities for business tax deductions slammed shut as of January 31st, but not all of them! If you want to send less money to the IRS this year, and keep more of your business’s money for the benefit of you and your employees, there are still some things you can do.

Make SEP IRA Contributions

If you are sitting on some cash, you may want to make contributions to a Simplified Employee Pension plan. If you don’t have a plan established already, it’s not too late to get one set up in time to benefit you before you file your last tax return for tax year 2016. Unlike 401(k) plans, which must be established and funded by the end of the calendar year for deductions to count for that tax year, SEP IRAs give individuals and employers some extra flexibility: Employers have until their tax filing deadline (including extensions) to establish the plan, make contributions, or both.

For those of you operating as self-employed/sole proprietors or running S corporations, you have until April 15th of 2017 to make SEP IRA contributions for tax year 2016. For employers filing as corporations, you have until your first filing deadline of 2017 – the Q4 filing date for tax year 2016 – to establish or contribute to a SEP or both.

Contribution Guidelines

For SEP IRAs, the employer cannot pick and choose which employees qualify for contributions. Employer contribution percentages must be equal for all employees eligible for the plan.

Employees don’t make elective deferrals under a SEP plan, and there are no catch-up provisions for employees over the age of 50 as there are for IRAs and 401(k) plans. All contributions must be employer contributions. That is, employees cannot contribute to their employer’s plan on their own, and every eligible employee must receive the same percentage of compensation.

The maximum allowable contribution for any given employee cannot exceed either 25 percent of total compensation, or $53,000 – whichever is less – for tax year 2016. 

Special Considerations for Self-Employed SEP IRA Owners

If you are self-employed, the math is a little different. This is because you must account for the effect of self-employment taxes on your taxable income. For self-employed individuals, your maximum contribution works out to 18.587045 percent of your total compensation for the year, instead of 25 percent – again, up to a cap of $53,000 for tax year 2016.

Calculating Self-Employed Compensation

For the purposes of calculating allowable SEP IRA contributions, base your total compensation on net profits for the year, minus one-half of your Social Security tax liability, and minus the amount of your SEP contribution.

This provision may apply if you are a sole proprietor, or employed under a closely-held LLC structure.

Limits for 2017

If you establish a SEP IRA for 2017, you can also begin making contributions for tax year 2017. This year, contribution limits are slightly higher than they were for tax year 2016. You can contribute a maximum of 25 percent of each eligible employee’s compensation (18.587045 percent for self-employed individuals) up to an overall per employee cap of $54,000.

The optimal strategy, however, is to make available contributions for tax year 2016 first, and exhaust them before you begin making 2017 contributions.

Contributions Are Voluntary

There is no obligation to continue making SEP contributions. Unlike traditional, defined benefit pension plans that require ongoing funding, funding a SEP IRA is completely voluntary. If business conditions do not permit you from making a large SEP IRA contribution for your employees, you don’t have to. But if you do make a SEP contribution, you must contribute an equal percentage of compensation to the account of each eligible employee – including employees over age 70½.

Contributions are not taxable to employees, but are fully deductible to the business/employer. Report all contributions on an IRS Form 5498 for the year the funds are actually deposited into the account. 

Make SIMPLE IRA Contributions

Like the SEP IRA, the SIMPLE IRA – an alternative defined contribution plan for companies with fewer than 100 employees – also allows you to make contributions for employees through your tax-filing deadline. That is, you can still make contributions even after the end of the tax year – provided you have already established the plan. At this point, this provision only applies to matching and non-elective contributions, or employer contributions, for tax year 2016. However, if you haven’t already established the plan, you can’t make 2016 contributions. You may still be able to establish a SEP plan, however, if you’re eligible, and make contributions for tax year 2017.

You must make matching and non-elective contributions to the financial institution maintaining the SIMPLE IRA no later than the due date for filing your business’s income tax return, including extensions, for the taxable year that includes the last day of the calendar year for which you made the contributions. If you extend your tax return, then you have until the end of that extension period to deposit contributions, regardless of when you file the tax return.

Let us help you make informed decision about your business insurance needs.  Our licensed agents specialize in helping small businesses obtain the best coverage at the best price, give us a call today at 888-834-8619.

The post Businesses Owners and Self-Employed: You Can Still Reduce Tax Liabilities For Tax Year 2016 appeared first on Small Business Quote.

The top two factors affecting your commercial auto insurance premiums haven’t changed. The primary drivers of commercial auto premiums are still very basic: Your history of claims, and the driving records of your individual drivers.  It follows, then, that you can get a lot of value out of focusing your hiring on mature, experienced, responsible drivers. Once you have selected solid people, the next step is to enforce safety standards and provide them with adequate rest and the tools they need to drive safely. But there are a number of new tools at your disposal, too. New technologies and advances in underwriting are making it possible for employers of drivers to take a more pro-active approach to risk management and claims reduction. The ultimate effect is to lower your premiums – saving you money.

Here are some things you can do to keep your commercial auto premiums down:       

• Consider using a monitoring service, such as SAMBA, to automate your drivers’ monitoring program. Drivers don’t always self-report their tickets, accidents and DUI issues. Services like SAMBA’s driver record monitoring function routinely checks for new violations, DUI or DWI convictions, license suspensions, revocations, and approaching license renewal dates. You get a report each month, and you can take action, if warranted.
• Add GPS tracking to your vehicles. Advances in GPS tracking and displays enable you not just to track your vehicles’ whereabouts and control malingering, but also monitor for speeding.
• Turn the public into your eyes and ears. You’ve seen those signs on the backs of commercial vehicles that say “How Am I Driving? Dial 555-555-5555?” They work. But if you do get complaints, it’s important to follow up on them, in writing.
• Do a pre-screen of all new hires. You can pull their abstract from the DMV. In most cases, your agent can help you run a quick check on a new hires’ driving record. You want people with 1 point or less on their licenses.
• Incidents happen. But if a driver has two or more incidents, you don’t want him on the road.
• DUI or DWIs are a deal-killer. You don’t want them on the road for you, and you don’t want to be paying their insurance premiums.
• Raise your deductible. For best results, keep your deductible above $2,500 or so. This keeps the fender-benders off the books. The deductible is usually trivial compared to the potential claim if your driver causes bodily injury to someone else, anyway. Take the savings and put them aside to pay the fender-bender issues, or buy more liability or umbrella coverage.
• Maintain an ongoing safe driver program. You can reward or bonus drivers for a certain number of miles of incident-free driving, for example, or bonus all your drivers with a share in premium savings if their safe records helps you save money.
• If your state law allows, periodically pull your drivers’ DMV records and inspect their driving habits off the job.
• If your state allows, consider a safe-driving clause in the employment agreement.
• Don’t spend more on vehicles than necessary. Expensive vehicles mean higher premiums.
• Consider whether you need collision coverage. If you have an aging fleet, or you can afford to replace the occasional vehicle, consider cancelling collision.

Auto insurance companies are constantly adjusting their underwriting, striving to compete with each other for their share of the market. If your drivers have a good record, or if you can point to a number of these countermeasures designed to control your claims experience with your carrier, it pays to give your agent a call periodically, and see what savings you can qualify for.

They payoff isn’t just in lower premiums. As an employer, you also win by having to pay out less in deductible charges, you have a safer work force, and you expend fewer man-hours, both in lost productivity due to accidents and administrative time in dealing with the aftermath of accidents and the insurance claims

Let us help you make informed decision about your business insurance needs.  Our licensed agents specialize in helping small businesses obtain the best coverage at the best price, give us a call today at 888-834-8619.

The post How to Lower Your Commercial Auto Insurance Premiums appeared first on Small Business Quote.

If your company manufactures any kind of product, from cupcakes to car parts, computers to clothing, it could easily find itself on the wrong side of a lawsuit by a plaintiff claiming your product(s) caused some kind of injury or damage. In today’s litigious society, it is not even necessary for you to be the manufacturer of the product. Sellers are often sued alongside the manufacturers. That is where product liability insurance comes in.

It’s only natural that people want to be safe from injury and property damage whether from food poisoning, getting into an auto accident due to tire failure, or having the foundation of their home crack, but how do protect your company from liability? The answer may be with product liability insurance.

Will My General Liability Insurance Cover Injuries Product Related Injuries?

Most liability claims are covered as part of your company’s commercial general liability insurance (CGL) policy. However, products that are particularly likely to lead to liability may be handled separately. As part of a sound risk management program, you should know well in advance how your current coverage would respond to such claims.

The CGL policy covers any bodily injury and property damage occurring away from your business premises that happens as a result of your product or completed work find more. If a product is consumed on the same premises, such as food served in a restaurant, the policy provides coverage once the insured has relinquished possession of the product whether the injury or damage occurs on or away from the premises.

The standard policy excludes damage to the product when the damage was caused by some part of the product itself or faulty workmanship in its manufacturing. For example, one small part in a complex, expensive piece of equipment may fail and cause tremendous damage to that equipment. If the part that fails was purchased from an independent subcontractor, the insurer of the manufacturer of that part would cover damage to the equipment. By contrast, if the manufacturer of the expensive equipment itself produced the piece that failed, the damage is not insured under the CGL policy.

Product liability exposure lasts as long as the product is in use. Someone may be injured or damage may result from use of the product years after it was manufactured and the product may no longer be in production. Product liability insurance should be kept in force as long as the products are being used and could cause injury or damage. Partnerships and sole proprietorships are especially vulnerable. These business owners cannot evade personal liability exposure by taking cover behind a corporate shield; thus, they need to take particular care to keep product liability coverage continuously in force. Because of the continued liability exposure, insurers require insureds to provide detailed information about discontinued products.

The CGL provides coverage for product liability that may arise when products are sold internationally, but only if liability is determined by a lawsuit in the United States, Puerto Rico, or Canada. Since product liability lawsuits are often filed in the country where the alleged injury or damage occurred, any business whose products are sold overseas will need a foreign coverage endorsement added to its CGL policy.

Another type of coverage not provided by the CGL policy is the expense of a product recall, though this can be expensive and severely damaging to a company’s reputation. Separate product withdrawal expense insurance may be available depending on the particulars of your business and its product.

The basic premise of most product liability lawsuits is that the product manufacturer or vendor failed to take appropriate steps to insure the product was safe and sound. It is impossible to eliminate all hazards in connection with many products. No matter what you do, someone could fall off a ladder or burn themselves with a hair dryer, and so forth. To show that you did everything possible to prevent such injuries, it is critically important to communicate with buyers and users of the product about such hazards. The thing to remember is that if there is a lawsuit, your best defense is to prove you took all reasonable measures to assure no one would be injured.

Let us help you make informed decision about your business insurance needs.  Our licensed agents specialize in helping small businesses obtain the best coverage at the best price, give us a call today at 888-834-8619.

The post Product Liability Insurance Basics and Why You Might Need It appeared first on Small Business Quote.