Explaining these commonly misunderstood commercial insurance policies.

As a business owner, you know that you are responsible for securing insurance for your company.  However, the commercial insurance market can be overwhelming with all the options and carriers out there.  To make matters worse, many business owners attempt to navigate the market with incorrect assumptions about certain policies.  To ensure that you are making informed coverage decisions, here’s what you need to know about these commonly misunderstood commercial insurance policies.

Business Interruptions Insurance

  • What is it?
    • Business interruption insurance is designed to cover the revenue your business would lose if it were forced to close its doors temporarily. In addition to compensating you for lost income, business interruption insurance also provides coverage for recurring operating costs such as your business’s rent, utility payments, and employee paychecks.
  • Why is it misunderstood?
    • Many business owners do not secure this coverage because they assume that it is included in their commercial property policies. Unfortunately, this simply isn’t the case.  While your commercial property insurance will offer coverage for the physical damage that your business’s building, supplies, inventory, and equipment sustain during a covered peril, that’s as far as coverage goes.
  • Bottom line
    • If you do not secure business interruption insurance, then you risk a temporary business closure becoming a permanent one. Business interruption insurance is necessary to keep normal operations up and running despite the lack of income coming in.

Directors & Officers (D&O) Liability Insurance

  • What is it?
    • D&O insurance is a type of liability insurance that protects a company’s executive figures while they are serving on a board of directors and/or as officers of the company. This insurance offers coverage in the event that executives make poor decisions that have adverse financial consequences for involved parties (employees, vendors, customers, investors, etc.).
  • Why is it misunderstood?
    • Many companies assume that their executive staff is protected by other forms of liability coverage. However, directors and officers require specific protection.  Should your business be hit with a D&O claim, your company’s executive staff would be held liable for compensating affected parties and covering their own legal costs.  As the cost of these claims is typically very high, failing to secure D&O insurance can leave the personal assets of executive staff vulnerable.
  • Bottom line
    • If your business is managed by a board of directors or a team of company officers, then securing D&O liability insurance is the only way to ensure that the cost of a claim does not leave them in a state of financial ruin.

These are some of the most commonly misunderstood commercial insurance policies explained in more detail.  Do you need help securing the right coverages for your company?  If so, then contact the experts at John E. Peakes Insurance Agency.  Our dedicated team is eager to assist you with all your commercial coverage needs today.

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