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Your Bank > Education and Advice > CNB University

Properly Insuring Your Business

Margaret Meyer
Margaret M. Whelehan is Vice President - Personal Banking/Insurance Agency Manager and can be reached at MWhelehan@CNBank.com or (585) 249-4980 x41034.

Property and casualty insurance provides coverage for losses due to the physical damage or destruction of your business. With the right policy, neither fire nor exploded boiler can put you out of business. Everything from your office building to your cabinets to your water cooler can be covered.

You can buy various types of insurance protection separately, or you can purchase one package that covers many potential hazards. Among the forms of coverage you can purchase are:

  • Building and equipment insurance: This protects you if your facility or equipment is damaged or destroyed
  • Valuable papers insurance: This protects you if the documentation supporting your accounts receivable (or other valuable business records) is lost or destroyed
  • Business interruption insurance: This protects you by replacing some or all of your operating cash flow if your business is unable to maintain its normal operations for a period of time (typically up to 12 months) due to a covered event

What if you or a key employee dies or becomes disabled?

Unfortunately accidents happen not only on the job but also at home, and illness can strike anyone. Though the death or disability of an owner may be a minor issue for large businesses, small businesses may find themselves in a bind. And if you’re a sole proprietor, you’re personally responsible for all of the debts of your business, so everything you own could be repossessed if you’re unable to pay your bills.

To survive a money crunch, your business can purchase life insurance and disability insurance to cover you, with the business named as the beneficiary. Upon a triggering event (death or disability), the policy will pay your business a certain amount of money, which it can use to cover its normal operating expenses.

Your business can also purchase life insurance and disability insurance on a key employee--someone who is key to the success of your business (i.e., this employee brings in substantial accounts or has specialized knowledge or talent). Again, on the triggering event, your business would receive a sum of money to compensate for the lost income generated by the event, or for the cost of replacing the employee.

Note: These types of policies are different from workers’ compensation insurance, which nearly all states require businesses to have. Workers’ compensation insurance provides medical coverage and income replacement to your employees if they’re injured at work or get sick from job-related causes. Once an employee opts to receive benefits under such a policy, he or she is usually prohibited from suing your business for the same injuries.

Protect business assets from claims and lawsuits

With a general liability insurance policy, the insurance company will pay (up to policy limits) third parties who claim they were injured or their property damaged by your product or service. If a lawsuit is threatened or filed, the insurance company will hire and pay (again, up to policy limits) a lawyer to defend you.

You can purchase general business liability insurance separately or as part of a commercial package policy, which combines this coverage with other types of coverages, such as property and casualty insurance. Certain small businesses, including retail outfits, can buy a business owners policy, which includes a general liability insurance line. If your business needs broader coverage or higher liability limits than these policies offer, you can purchase supplemental liability insurance with a commercial umbrella policy.

An important point: If you provide professional services (e.g., doctor, lawyer, accountant), a general liability policy doesn’t cover you for losses incurred by third parties arising from your professional acts. In this case, you may need to buy professional liability insurance, which protects you against liability for injury done to others due to your misconduct or lack of skill; or errors and omissions insurance, which protects you against liability for things that you did improperly or failed to do.

You’re invested in your business, so it makes sense to protect that investment with smart insurance coverage. With our insurance services, we shop and compare rates, and you pick the quote – online CNBank.InsuranceAisle.com or by phone (844) 427-7338. Let us customize an insurance plan based on your needs. That way you can rest easy, knowing your business is protected.

Source: ©2016 Broadridge Investor Communication Solutions, Inc. This material provided by Margaret M. Whelehan.

CNB Insurance Agency is a wholly owned subsidiary of The Canandaigua National Bank and Trust Company. Products offered through CNB Insurance Agency are not deposits or obligations of, or guaranteed, or endorsed by, The Canandaigua National Bank and Trust Company. These products are not federally insured by the Federal Deposit Insurance Corporation or the Federal Reserve Board. Insurance Companies offering products through CNB Insurance Agency are independent of and not affiliated with The Canandaigua National Bank and Trust Company or CNB Insurance Agency.