You know what they say about assumptions – never make them, particularly if you’re a business owner, and particularly when it comes to insurance.
Too many business owners mistakenly believe commercial insurance policies provide blanket coverage for just about everything. Unfortunately, that’s not the case, and there are a few things you definitely shouldn’t assume about commercial insurance coverage.
Here are three of the biggest misconceptions you need to be aware of:
Misconception 1: Damage from floods is covered.
Similar to homeowners insurance policies, commercial property insurance policies do not cover flood damage at all…ever. Coverage has to be purchased through the National Flood Insurance Program (NFIP).
Too many business owners found this out the hard way during Hurricane Katrina; they assumed their destroyed businesses would be covered under commercial property insurance coverage. In fact, they weren’t and aren’t, and the result was that many businesses never re-opened after Katrina.
Misconception 2: Commercial auto insurance covers any vehicle you drive.
Unfortunately, if you’re driving a rented car or one borrowed from an employee and have an accident, your commercial policy would not pay for any damages – not for the car you were driving nor for another person’s property damage or bodily injury expenses. Note that it doesn’t matter why you were driving the vehicle.
Since commercial auto insurance won’t cover losses arising from accidents you’re involved in when driving a vehicle you don’t own, hired vehicles also won’t be covered. If you rent a car to make a long business trip and have an accident, and have not opted for insurance through the rental car company, you may have been driving uninsured.
If you frequently rent cars or other vehicles for business purposes, add an endorsement for hired or non-owned cars.
Misconception 3: You’re covered worldwide.
So you’re off to Europe on business. Whether or not your commercial insurance policy is folded up in your carry-on bag, you aren’t automatically covered for any losses relating to your business that occur while you’re in Europe. Many people believe they’re covered worldwide under commercial insurance, because they know that in most cases, your homeowners insurance follows you worldwide; if your valuables are stolen while you are away from home, your homeowners insurance would cover your losses.
Typically, commercial policies only extend coverage through all of the U.S., U.S. territories and Canada. Have no fear, though; you can usually get a worldwide coverage endorsement added to most commercial insurance policies. It will mean paying a little more in premiums, but you’ll undoubtedly enjoy your business in the City of Lights or the home of Buckingham Palace more, knowing that you’re covered should you incur any losses.
It likely won’t be the favorite part of your job, but understanding your commercial insurance policy and its coverage is essential for business owners. Without it, you stand to lose everything, including your business. You know what your business needs, so talk to your insurance agent about your options and find the protection that best suits you.