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Business insurance is essential for a business of any size. Usually, the most important aspect for business owners, looking to spend wisely, is price. However, having the correct coverages in place is just as important. As a result, you will need to tailor a policy to your business. It can get complicated, especially if there is a risk you are unprepared for or maybe even unaware of.

Following are the major business insurance coverages:

Workers Compensation Business Insurance

If you have employees, this may be the most important policy to have. One reason is that workers comp insurance is required in every state. There are some other facts about workers comp insurance that you will want to be aware of:

Policy Basis: From an insurers point of view this is simple. All workers comp policies are based on payroll. That means the premium is developed using the estimated, then the actual payroll for your company. The actual comes from the payroll audit the insurance company will do on your policy each year.

To prepare for the audit, it is important that you keep accurate payroll records. For example, you can deduct vacation, sick pay and the half time from overtime. It will reduce payroll, therefore lowering your insurance premium.

Class Code:  All of your payroll gets distributed into class codes. Class codes are numbered and contain a description of the type of work that is done for each code. For example, 8810 is a code for clerical workers; 8742 is a code for sales people, etc.

So, if you own a plumbing business, the payroll of your employees who do plumbing would be placed in the plumbing class code, if you had a sales person, his or her salary would be in the sales code. The codes are important because they contain the rate that will be multiplied by the payroll to develop the premium.

Discounts: Although class codes are developed by a national bureau, credits against the rates can and usually are offered by insurance companies.

Modifications: Modifications or experience mods as they are called, can also change the cost of your insurance. As you business grows, your company loss records are maintained with the insurance company. They submit them to a bureau to get an experience mod for your company. The mod can either be a debit which will increase your premium or a credit that will reduce it.

Commercial Auto Business Insurance

Let’s say you had an employee who was on the clock. You wanted them to run to an office supply store to purchase some supplies. If they take their own car and get into an accident, insurance would not cover any damage that your employee caused.

You can get liability that covers bodily injury and property damage while using vehicles for business use in one of several ways.

Non-owned autos: If your car is at the shop, a substitute vehicle will be covered on a temporary basis.

Non-ownership insurance: This is the liability coverage you can purchase to protect an employee who occasionally uses their personal car for business use.

Hired auto insurance: If you are using a car for your business that is not registered to you or that you do not own, this coverage will protect you. An example of this would be driving a rental car on business.

Auto Insurance: Commerical auto works like a personal auto policy. You are protected from any liability (property damage or bodily injury) you or an employee has caused. You can purchase collision coverage which protects the car if it is damaged in an accident. Comprehensive insurance is also available for an other-than collision incident like theft or vandalism.

You will have to maintain accurate records of your vehicles to get this coverage at the best price.

Commercial Business Liability Insurance

Liability insurance will provide protection for you and your employees if any of you cause property damage or bodily, personal or an advertising injury. In addition, you will be protected from any liability you incur from products and completed operations.

You can go online to receive contact from several agents in your area who will be glad to sell you business insurance. However, usually business coverage is too complicated to establish online. You will have to provide detailed information to your agents/s of choice to obtain quotes from three or four companies so you can compare them.

Business insurance can be a significant business expense, so develop a good relationship with a reputable insurance agent.