NA - Business Insurance

Lando

Lando

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Lando
Anyone here an expert in business insurance? I own a small consulting firm with five employees and currently have a professional liability/E&O policy. For obvious reasons, we are also adding general liability insurance now. My personal insurance policies are with AmFam, but they aren't willing to write a policy for our type of business, so I went to an independent agent/broker who I'm acquainted with to look at other options.

My wife and I are both employees of, and work full time, in the business. This new agent wants us to switch our auto insurance (for two personally owned autos) to a commercial policy, in addition to professional and general liability policies with him. His argument is that the commercial auto policy will keep the business covered better and that they will also cover non-owned vehicles if our employees are running errands, going to meetings or rent a vehicle while traveling for work.

Our existing AmFam agent said this commercial auto policy could actually open us up to greater liability since the autos are personally owned. In addition, he recommends simply adding a non-owned clause/coverage to the general liability policy for a much smaller cost than a full commercial auto policy and says this will give us the same non-owned/business use coverage of the commercial auto policy.

My wife and I drive more, but our employees drive very little for work besides going to an occasional local meeting, local event or a very rare meeting within a couple hundred miles of our office. What do you experts think is our best option?
 
I was told that if I insure vehicles under biz name instead of personally, then the vehicles are subject to local business property tax (they are not subject to tax if personally owned).
Not a huge part of the decision, but something to keep in mind.
 
How is your business structured? If you are a Sole Prop, Partnership or LLC the liability separation won't matter.

Most commercial policies I have encounterd require listing all approved drivers on the policy so make sure you have an open driver policy otherwise no one else can drive your car.

On personal side, many personal polices will not cover you if you are using your personal car for business beyond commuting, so check what your limitations will be if you are using it in your business operations
 
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^ That
You may not be covered with a personal policy and most likely your employees won't be covered, even for that occasional trip. If you want to roll the dice, that is up to you, but accidents happen. I have owned a business for 24 years and have seen my share of employee car accidents.
 
Shawn said:
How is your business structured? If you are a Sole Prop, Partnership or LLC the liability separation won't matter.

Most commercial policies I have encounterd require listing all approved drivers on the policy so make sure you have an open driver policy otherwise no one else can drive your car.

On personal side, many personal polices will not cover you if you are using your personal car for business beyond commuting, so check what your limitations will be if you are using it in your business operations
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We're an S-Corp. My preference would be to continue covering our personal vehicles through our personal insurance, but include an add-on to our a new commercial liability policy that covers employees (and us) driving for work-related needs. I have one agent telling me a commercial policy will cover us better, but I have another agent saying that if I have personal vehicles covered under a commercial policy it opens us up to being sued personally if anything bad ever happens. Each agent is proposing the solution that suits his best interest and I feel like they are both genuinely looking out for our best interest...I'm debating bringing a 3rd agency into the mix for another opinion, but I'd rather not string someone along that I don't plan to do business with if I can help it.
 
I insure one car personally and the other with the company in both states I do business in. That allows me to drive any car anywhere and have coverage extended from the personal policy while my commercial policy only covers approved drivers in company vehicles. It also allows me to lend the personal car to visitors if I choose. The company policy is cheaper and the personal policy has broader with more inclusions.
 
Lando said:
We're an S-Corp. My preference would be to continue covering our personal vehicles through our personal insurance, but include an add-on to our a new commercial liability policy that covers employees (and us) driving for work-related needs. I have one agent telling me a commercial policy will cover us better, but I have another agent saying that if I have personal vehicles covered under a commercial policy it opens us up to being sued personally if anything bad ever happens. Each agent is proposing the solution that suits his best interest and I feel like they are both genuinely looking out for our best interest...I'm debating bringing a 3rd agency into the mix for another opinion, but I'd rather not string someone along that I don't plan to do business with if I can help it.
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So problem is you have insurance agents that sell the insurance products giving you legal advice...if you are a closely held S-Corp as a majority shareholder that corporate veil is pretty thin anyway. Don't get a third insurance opinion, get a corporate business lawyer opinion. If you do not have one, ask your CPA for a good reference and and pay $250 or so for an hour consult to make sure your are structured properly for your scenario and YOUR best interests...THEN find the insurance product that fits those needs. You are trying to fit your needs to an existing product.

I have been in business for myself in one form or another for the past 30 years now...and having a corporate lawyer available has been the greatest thing ever and he has paid for himself more than once. We do not pay a retainer..only as needed for services. I too had co-mingled vehicles and busines with an S-Corp and the lawyer got us straightened out in a heartbeat with how to structure it to offer the best protection.

You don't wanna find out AFTER an accident that you were wrong or did not receive the correct advice. Trust but verify...it will cost you literally only a few hundred dollars.
 
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Shawn said:
So problem is you have insurance agents that sell the insurance products giving you legal advice...if you are a closely held S-Corp as a majority shareholder that corporate veil is pretty thin anyway. Don't get a third insurance opinion, get a corporate business lawyer opinion. If you do not have one, ask your CPA for a good reference and and pay $250 or so for an hour consult to make sure your are structured properly for your scenario and YOUR best interests...THEN find the insurance product that fits those needs. You are trying to fit your needs to an existing product.

I have been in business for myself in one form or another for the past 30 years now...and having a corporate lawyer available has been the greatest thing ever and he has paid for himself more than once. We do not pay a retainer..only as needed for services. I too had co-mingled vehicles and busines with an S-Corp and the lawyer got us straightened out in a heartbeat with how to structure it to offer the best protection.

You don't wanna find out AFTER an accident that you were wrong or did not receive the correct advice. Trust but verify...it will cost you literally only a few hundred dollars.
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Great point, Shawn. Yes, we have an awesome attorney who is well worth his hourly rate and then some (just don't tell him I said that). I never even thought to give him a shout about insurance. Thanks for the input!
 
I have business insurance for hired vehicles only. That's not uncommon.

If your employees need to drive somewhere rent them a car and your covered. If it's an errand or something have them use their own car and pay them the standard mileage reimbursement rate for the use of personal vehicles.
 
First things first.

Having something insured with more insurance will not make you more likely to be tagged - it makes you less likely. I get the claims that "having more insurance makes you more likely to be sued," but don't endorse it; after all, the insurance is there as a shield for you. If you have enough to lose (IE, anything), it is not a bad thing to have insurance.

That said, though, I'd only buy business auto insurance if the business has vehicles; otherwise, you want "Hired & Not Owned" coverage, which should serve nicely in the event of an incident by an employee while driving in the course and scope.

But (and you knew this was coming), ask your counsel, and for goodness' sake, make certain that you have an insurance agent who is legitimately knowledgeable in commercial lines, and specifically, in insuring businesses like yours. You'd be amazed how significant the differences between business and the coverages they need, and those differences can make or break you in the event of a loss event.
 
Be aware some of the insurance recommendations are very state specific. I ran into this problem with our consulting company in the early 2000s. I doubt things have gotten easier.
Also, since driving was not part of the job, and consultants were assigned to a site. They were covered by personal insurance for their work as part of the commute.
For managers/sales staff we carried three separate policies. A general umbrella liability policy was the ultimate backup (never used it in the fifteen years we had the company), a rental/hired car policy, and a non-owned policy. We separated the two last policies because of travel; well worth it.

As others have said, start by talking to a lawyer.

Tim
 
If you can’t trust your insurance agent to know what’s best? You need to find a different one that you do trust.
 
Stewartb said:
If you can’t trust your insurance agent to know what’s best? You need to find a different one that you do trust.
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You can trust either or both agents. But I have found often that the agents experience colors the perceptions, compounded by sales agents often not understanding a lot of legal nuances.

Tim
 
tspear said:
You can trust either or both agents. But I have found often that the agents experience colors the perceptions, compounded by sales agents often not understanding a lot of legal nuances.

Tim
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This is true. I have found, despite good intentions, I haven't always gotten the best advice from insurance agents, even when you ask them to research something. At the end of the day, they are sales people, not attorneys.

A tale of caution; I had Farmers for my business and my vehicles for many, many years. One time, I went backpacking and a squirrel ate through one of the transmission lines on a hybrid SUV I owned (through the company). Apparently, Farmers had modified the terms a few years before that and rodent damage wasn't covered. That cost me $8,000 and the agent I had had for nearly 20 years didn't go to bat for me. Needless to say, I am no longer with him or Farmers.
 
I’ve found my insurer better informed about insurance than my attorneys have been. My attorney is happy to take time to learn but that education is billable.
 
Thinking of agents.
I need a new one for a rental property I own in Maryland, however I live in Boston.
Any recommendations?

Tim

Sent from my LG-TP260 using Tapatalk
 
I talked to our attorney today and he agreed that a company auto policy is unnecessary since the company doesn't own vehicles. He recommended the hired/non-owned endorsement and making sure our umbrella was big enough to supplement the general liability policy adequately. Thanks for all of the feedback everyone...the discussion has been very helpful!
 
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