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Insurance Protection

This list of insurance types that may apply to your business is NOT a complete list. The specific needs of your business may vary, as there is not a single, all-inclusive insurance package that will apply to everyone. Talk to your insurance agent or broker about the needs for your particular business, profession, location and facility and review the various options available.

Understand the various options available before you purchase the insurance. Once you have purchased the insurance, take the time to know what you have purchased – the coverage, the limits, the deductibles, etc. Review this information annually with your agent and determine if your needs have changed.

You can also find more information about insurance for small businesses by visiting the Small Business Insurance page of the Colorado Division of Insurance website – dora.colorado.gov/insurance. Find that page by clicking on “Property / Liability” under “What we regulate.” 

Commercial Automobile Insurance:
Colorado law requires this coverage. Therefore, if you have any type of motor vehicle titled in the business’ name, you must carry the insurance in the name of the business also.

General Business Liability:
This is the broadest form of coverage that can protect you against losses when injury, damage or even death results to another person or his/her property because of business negligence. You may be responsible for obligations covering medical and disability expenses and even death and funeral compensation to the dependents of one who has been injured. Your obligations may even extend beyond the general liability for which you assume you are responsible.

Read the terms of the insurance contract carefully. Ensure that your general business liability insurance extends to any off-site premises and business locations or practices. Also know that Excess Liability coverage can be purchased.

Cyber Risk Insurance:
With cyber risk insurance, your needs will depend on the type, size, and other characteristics of your business. If your business sends or receives electronic data, uses or stores electronic data, then your business could have an exposure to a cyber-related loss. Cyber risk coverage or a cyber insurance policy is designed to help a business mitigate covered risk exposures by providing some insurance coverage for some costs involved with a cyber-related breach or similar event. This kind of insurance can provide both first-party (business owner) and third-party (customers, vendors, suppliers) coverages. The cyber insurance policy can provide first-party insurance coverage for losses associated with data destruction, theft, hacking, and extortion. There can be coverage for costs associated with recovering data and repairing computer systems. Also, there can be coverage for some legal fees and expenses associated with notifying your customers about a breach. Cyber risk coverage can be added or endorsed onto other insurance policies. Be cognizant of exclusions and limitations of cyber risk coverage and a cyber insurance policy.

Flood Insurance:
Flood Insurance is generally not covered under Business Property Insurance. A separate policy, specific for flood risk, is required. Find out more about flood insurance and find agents in your area that sell flood insurance by visiting the website of the National Flood Insurance Program, FloodSmart.gov. However, a business interruption insurance policy may cover loss of business continuity due to the flood, or related events. Your policy will be specific about what is covered.

Health Insurance:
Under the Affordable Care Act (ACA), employers with 50 or more full-time employees must either offer minimum essential health coverage that is “affordable” and provides “minimum value” to their full-time employees and their dependents, or potentially make a payment to the IRS for not doing so. This is called the “employer shared responsibility.” These employers (called “applicable large employers” or “ALEs”) are also subject to information reporting responsibilities regarding the employee coverage.

Most employers with less than 50 full-time employees are not considered ALEs and are not subject to the employer shared responsibility to offer coverage. However, these employers can offer health coverage to their employees.

For smaller businesses, the ACA can help employers afford the cost of covering their employees. Businesses with fewer than 25 employees, and that provide health insurance, may qualify for a small business tax credit of up to 35 percent (up to 25 percent for non-profits) to offset the cost of health insurance.

There are many more details to providing “affordable” coverage, understanding if your business is an ALE, how the reporting requirements work and how to qualify for the tax credits, so look for more information on these topics at irs.gov and healthcare.gov, as well as talking to your insurance agent or broker.

Product Liability Insurance:
If you manufacture a product, product liability insurance can also cover the goods you produce. Coverage usually applies once you have given the product to someone else who will modify or alter it in some way or distribute it for wholesale or retail sale. Insurance coverage typically relates to the product itself, but may also protect you, as the manufacturer, should someone experience personal injury or property damage from the use of your product. Completed Operations Insurance: If you are a contractor, you can become insured for events that may occur after you leave the job site. Problems which may be covered include personal injuries or damage to someone’s property as a result of something worked on malfunctioning or breaking. This is called Completed Operations Liability Insurance.

Property Insurance:
This covers the property the business owns, both building and contents. It can also cover property of your customers. You can be protected against losses in the event your business is damaged as a result of natural disaster, fire, burglary or vandalism that may destroy all or part of your property.

Business Interruption Insurance: (Also referred to as “Specific Time Element Coverage”)
This can pay losses of income as a result of property damage that might occur to your business from either environmental factors, natural disasters or destruction by others, until you are able to begin operating again. Coverage limits will vary and are only for the amount of actual losses. Limited coverage for a specific amount of time and a specific amount of reimbursement (for example, coverage could be purchased for a 30, 60, 90 or 365 day period and would reimburse you for 50 percent of your profits) can help pay for your ongoing business expenses.

Inland Marine Insurance:
This can cover specific high value items, such as a computer, or any property item which has some mobility, such as a motor truck cargo, and contractor’s equipment. It can also cover your property while it is away from your business premises.

Errors And Omission/Professional Liability Insurance:
This is often recommended for employees, owners and directors of the business. Errors and omissions and professional liability coverage offer protection for employees and owners of the business against lawsuits that may arise as a result of their actions, or inactions, for duties performed during the course of business.

Surety/Fidelity Bonds:
There are several types of surety bonds that you can purchase that cover a wide range of losses. Fidelity bonds are designed to protect a business or employer from losses due to the dishonesty of employees, partners or officers in the business. However, the amount of coverage may be limited, so you should check with your insurance agent as to the specific amount of coverage necessary. Performance bonds guarantee a business’ performance because of an obligation or contractual agreement. If you default on a contract or agreement to do work, a performance bond will guarantee payment to the person who has contracted with you for the remaining work.

Unemployment Insurance And Workers’ Compensation Insurance:
This is required by law if you have employees in your business. Refer to the Employer Responsibilities chapter of this guide.