Insurance is a simple concept... that can feel complicated. We're here to help.

Insurance 101

in·sur·ance [in-shoor-uhns, -shur-]
noun
Coverage by contract in which one party agrees to indemnify or reimburse another for loss that occurs under the terms of the contract. Glossary of Insurance Terms

BizInsure Frequently Asked Questions

Professional Liability FAQ

General Liability FAQ

Business Owner Insurance FAQ

Professional Liability FAQ

1. What is Professional Liability insurance?

Professional Liability insurance—sometimes called Errors and Omissions (E&O) liability insurance, protects you and your business from bearing the full cost of defending a lawsuit against you pertaining to “negligence” or “failure to perform.” Those who perform services for others can make mistakes, overlook a critical piece of information, forget to do something, misstate a fact, be misunderstood or misinterpreted, misplace something, etc. and have the potential to be sued by clients or other third parties. Significant risks can be mitigated by an affordable Professional Liability insurance policy that can help protect against allegations such as:

  • Error, omission, or negligence in providing a service
  • Failure to provide a service
  • Violation of good faith
  • Overpromising
  • Improper documentation
  • Malpractice
  • Mismanagement
  • Misrepresentation of facts
  • Nondisclosure
  • Violations of state and federal law
  • And others

2. Who needs Professional Liability insurance?

There are a wide range of occupations that use Professional Liability insurance ranging from consultants and hair stylists to event planners and accountants, and beyond. In today’s hyper litigious world, if you provide a professional service to others for a fee, you have Professional Liability exposure. Professional Liability Insurance often is the most important type of insurance that a company can purchase, as it protects the individuals and the company from potentially catastrophic litigation costs associated with claims relating to negligence or product failure. Many contracts require that you have Professional Liability Insurance and, even when it’s not required, for our prices it’s worth the added peace of mind. Preparation isn’t everything about building and running a business but without being prepared you can lose everything you’ve worked so hard to build. No matter what Industry you’re in, people make mistakes, people point fingers and people misunderstand – when they do, BizInsure ensures you’re ready. Even if you have done nothing wrong, but a client alleges negligence on your part, the policy will still protect you and pay the legal costs in defending you.

3. Why is Professional Liability insurance particularly important now?

Consider the impact of a $100,000 lawsuit…or a million-dollar lawsuit on you and your business. Most small companies can’t absorb that kind of loss without devastating consequences. It’s important to remember that in the current business climate, you don’t have to do anything wrong to be sued. In fact, a large proportion of lawsuits are meritless. Regardless, such lawsuits must be defended, and that can be costly. Professional Liability insurance covers these legal defense costs and helps protects you from a current business climate comprised of:

  • A lawsuit-conscious public fueled by media publicity
  • An overabundance of lawyers
  • A belief that everyone deserves to be compensated
  • The idea that there is always a “deep pocket” with the ability to pay
  • An escalation of court settlements into the millions of dollars
  • Punitive damages that in some states can be doubled or tripled

4. What are examples of Professional Liability protection in action?

A Professional Liability lawsuit can be triggered by almost anyone who is “touched” by the professional service and there is a very broad spectrum of potential for Professional Liability exposure.

Sample Situation A: Site designer sued for delayed product delivery
A Web site designer was hired by a Fortune 500 company to design a Web site that would be radically more advanced than any competitor sites. The timeline indicated by the Web site designer put the site online within four months. Two months into the project, several key personnel left the Web site design team, and the company scrambled to find other qualified personnel to complete the job. After an additional three months, the site was still not operational, but one of the client’s competitors had already launched a site that was an instant success. The client sued the designer for $6M in lost sales. The designer settled the claim for $ 4.75 million, $1 million of which was paid by the designer’s E&O policy. The remainder of the loss was uninsured.

Sample Situation B: Management consultant sued for offering negligent advice
A management consultant was hired by a small manufacturer to recommend strategies for increasing productivity. The management consultant identified three key areas in the production process that were causing bottlenecks. One recommendation was to expand the factory, another to change equipment, and a third to increase staff. The client accepted all the recommendations. In order to make the necessary capital improvements, the manufacturer had to shut down temporarily for two weeks. The client completed the expansion, increased staff, restarted operations, and started working to make up the productivity lost during the two-week shutdown period. However, one year after the substantial capital improvements were made, the client’s productivity actually diminished. The client sued the management consultant for offering negligent advice and was able to recoup most of the cost of the capital improvements from the management consultant’s E&O policy.

5. Doesn’t my General Liability insurance policy cover the same exposures?

Most often it does not. General Liability insurance covers claims relating to bodily injury and property damage of others, and typically excludes claims related to the delivery of professional services. The liability risk associated with your professional errors, omissions and negligence can be far greater than those risks covered by a General Liability policy.

6. Is Professional Liability insurance expensive?

Certain professions such as doctors, lawyers and certified public accountants pay more for this coverage than other businesses. But coverage for independent professionals and small to midsized businesses can often be very affordable. Small businesses or sole proprietors often pay less than $350 per year for coverage and these premiums can often be financed, bringing monthly payments to less than $30.

7. Who IS covered under the policy? What is NOT covered?

Most policies cover all employees of a company as well as the corporate entity itself. Most policies can also be easily extended to cover independent contractors that you may hire or other roles such as volunteers or part-time employees.

Examples of things that are often NOT covered by these policies include: criminal prosecution in which you are convicted, allegations that are covered by other insurance policies (i.e. employment issues, bodily injury and property damage claims, auto claims, etc.), fraudulent acts that are proven, and acts outside of your typical scope of services.

8. Who handles the defense of claims?

One of the key benefits of this insurance is that most insurance carriers will pay your defense costs and find and manage outside counsel to represent you. Most insurance companies have pre-selected attorneys who specialize in handling defensive claims. Click here to learn more about our carriers.

9. How can I lower my Professional Liability insurance costs?

BizInsure helps you control your Professional Liability costs by providing multiple options from several insurance companies who offer this coverage at competitive prices. Our premium model is less expensive than most quotes you can obtain from traditional “brokers.”

10. Can you help find the best policy for me?

Yes, of course! Consider us your ‘virtual broker.’ Although the process is streamlined and automated to save costs, you’re never left out in the cold. Our friendly, knowledgeable support team is available at every stage of the process to help with anything a traditional agent would help you with – complete the application process, answer questions about your policy, file a claim, get ready for renewal, etc. After your purchase, as your business grows and evolves we provide ongoing service to help you stay on top of your insurance requirements over time. To get started either fill out the online application or call one of our friendly agents today at .

General Liability FAQ

1. What is General Liability insurance­­­ (GL)?

General Liability insurance is the most basic type of business insurance that you can purchase. Our General Liability insurance coverage (also known as Commercial General Liability insurance, or Business Liability insurance) protects your business from third-party claims of bodily injury, related medical costs, and accidental damage to another person’s property.

Whether an accident is your fault or not, or the accusation is true or meritless, general liability coverage will protect your business against covered claims by paying defense costs and any damages up to your chosen policy limit.

2. Who needs General Liability insurance?

Uncertainties in managing and running day-to-day operations are inevitable in the modern world. Any small business should seriously consider obtaining General Liability protection. While many customers are required to have proof of General Liability insurance before entering into a contract, below are a few guidelines, and typical liability scenarios, to help assess if this is the right insurance for you.

Do you or your employees…

  • visit a client’s place of work? Do clients ever visit your work site?
    • Example: While visiting a client’s offices, your client trips over your briefcase and gets injured.
  • have access to a client’s equipment? (i.e., a client’s server, computers or other tools).
    • Example: While moving the client’s server you drop it and it breaks.
  • use third-party locations for any business related activities?
    • Example: While having a launch party at a rented venue, your client gets hurt by a poorly stacked chair.

3. How much does General Liability insurance cost?

The cost varies based on specific needs as they relate to the work you do and your location however, our quotes start as low as $30/month. You can complete the entire transaction online or speak to a licensed agent who can walk you through the process and help you find the right coverage to meet your exact needs. Get an online quote now or call one of our licensed professionals at to find out just how competitive we can be.

4. What types of insurance companies do you partner with?

BizInsure’s mission is to become the primary one-stop shop for meeting the insurance needs of independent professionals and small businesses nationwide. We’re already making great progress toward that end and one of the ways that we will get there, is by partnering with the right insurance companies. All of our partners are ‘A’ rated (Excellent) by A.M. Best and are competitive about meeting the needs of our customers. We partner with forward-thinking insurance companies that are willing to drive the insurance industry to the bright future of affordability, reliability and convenience.

Business Owner Insurance FAQ

1. What is a Business Owner’s Policy (BOP)?

Please click here for a detailed definition of General Liability insurance. Now, take all that is covered under General Liability insurance and ADD business equipment coverage for your physical assets (leased or owned) – that’s standard BOP! Business equipment insurance covers all your business furniture and apparatus at up to five different office locations, which includes accidental damage or lost property for its replacement value. BOP coverage also includes the personal property of others if you are liable for its loss or damage.

For many small but expanding companies, buying a BOP to secure General Liability insurance coverage is an affordable way to protect themselves against multiple common business exposures at a singular competitive price. With BOP add-ons you can completely customize your protection by combining several types of insurance coverage into one convenient package. You can supplement basic BOP with coverage for:

  • An office building you own
    • Example: If your business can’t operate because of an insured loss, such as a fire.
  • Owned or leased vehicles
    • Example: If you or one of your employees are in an accident while driving for business purposes and your company is held liable.
  • Electronic data loss
    • Example: If you lose mission-critical data due to a fire or virus which results in loss of income.
  • Commercial crime
    • ü Example: If one of your full-time or temporary employees is accused of dishonesty, forgery or theft of a client’s property.

2. Who needs a BOP?

Commercial liability is an important consideration for independent professionals and small businesses. BOP is an affordable way to be covered on multiple fronts with one policy.

Here are a few questions to help you evaluate if you are a good candidate to benefit from BOP for your business.

Do you or your employees…

  • need general liability insurance coverage?
  • use your personal car or rent cars for business use?
  • own or lease business equipment such as computers, printers and furniture?
  • own the building at which you work and need to insure the property?
  • own and work with large amounts of data on a regular basis?
  • have employees that could act dishonestly or steal clients’ property?

Still have questions? Give our licensed agents a call at .

3. How much does BOP insurance cost?

The cost varies based on specific needs as they relate to the work you do and your location however, our quotes start as low as $42/month. You can complete the transaction online or speak to a licensed agent who can walk you through the process and help you find the right coverage to meet your exact needs. Get an online quote now or call one of our licensed professionals at to find out just how competitive we can be.

4. What types of insurance companies do you partner with?

BizInsure’s mission is to become the primary one-stop shop for meeting the insurance needs of independent professionals and small businesses nationwide. We’re already making great progress toward that end and one of the ways that we will get there, is by partnering with the right insurance companies. All of our partners are ‘A’ rated (Excellent) by A.M. Best and are competitive about meeting the needs of our customers. We partner with forward-thinking insurance companies that are willing to drive the insurance industry to the bright future of affordability, reliability and convenience.

Glossary of Insurance Terms

Overall: The following information is provided as general information; it is not intended nor does it replace a thorough understanding of your own policy or supersede the specific language of any policy. Also remember that Professional Liability policies are not standard, each differs. The terms and definitions presented here may be different from what is contained in a specific policy.

Admitted versus non-admitted carrier

Admitted carriers are protected by the state’s insurance funds in case of a financial default of the insurance carrier. There are payment limits by the state fund and these are usually less than an insured’s Professional Liability limits. Non-admitted carriers are not protected by these state funds.

Aggregate

An aggregate is a total. The total amount of liability for all claims in one policy year shall not exceed the limit of liability as stated on your certificate of insurance.

A.M. Best rating

A.M. Best is a Rating agency that provides information about the relative financial strength and claims paying ability of an insurer. Best’s Credit Ratings are independent opinions regarding the creditworthiness of an issuer or debt obligation. Best’s Credit Ratings are based on a comprehensive quantitative and qualitative evaluation of a company’s balance sheet strength, operating performance and business profile, or, where appropriate, the specific nature and details of a debt security. The complete Best’s Credit Rating Methodology is available.

Claim

A demand for money or services; also the filing of a suit or the starting of arbitration proceedings naming you and alleging injury or damage.

Claims made policy

Most professional liability policies are Claims Made or Claims Made and Reported. The insurance carrier that carries the current coverage is liable for the claim when the claim is reported, not when the act occurred. Versus an occurrence policy where the insurance carrier that was on the risk when the act occurred is liability for the claim regardless of when it was reported. The major importance of this is to continue to have coverage for Prior Acts in the future, an insured needs to continue to maintain a Claims Made Policy or have an Extended Reporting Period or Tail purchased to cover the acts in the past.

Deductible-aggregate

Limits the amount paid by the insured for deductible expenses to the amount shown no matter how many claims are initiated during the policy period.

Deductible-loss only/1st dollar defense

With this option the insured only pays the deductible if there is an indemnity payment

Defense outside the limits or Claims Expenses Outside the Limits

A sub-limit that will cover the costs of defending a claim without using the Limit of Liability. Once this is exhausted generally the Limit of Liability is reduced to pay for any additional defense costs.

Excess Insurance

Insurance coverage that pays once the primary insurance is exhausted. It is very important that the primary and excess policies have the same effective and expiration dates.

Exclusions

Defines what is not insured by this policy. You need to read this section carefully as certain policies by exclude a common area of your practice.

Extended Reporting Period or Tail

Commonly referred to as Tail coverage, this provides coverage after a Claims Made Policy expires or is no longer in force for acts that occurred during the time a Claims Made Policy was in-force. You generally have a right to purchase this coverage (within 30 to 60 days) whenever a policy is not renewed. It does not provide any coverage for any future acts.

Following form policy

When one insurance carrier will not provide all of the needed insurance coverage, other carriers may be willing to provide Excess Insurance to provide the necessary limits. A Following Form Policy uses the terms and conditions in the primary insurance policy to cover and settle losses. This helps prevent uninsured insurance exposures that might result if the policy language between the underlying coverage and the Excess Insurance are different.

Hammer Clause

This is the clause contained in many Insuring Agreements that states that even though the insurer will not settle a claim without the insured’s consent, the insurer’s exposure to the loss is limited to the amount that would have been paid if the insured had taken the insurer’s recommendation. In other words, if an insured does not accept the insurer’s recommendation, then the insured is liable for any additional costs.

Innocent Insured

Most policies exclude coverage for deliberate or criminal acts. This coverage protects the other partners or principles from the deliberate acts of another employee or partner if the others had no knowledge of the actions.

Insuring agreement

The Insuring Agreement defines what and who is covered and the responsibilities of all parties.

Limit of liability-aggregate

The maximum indemnity and claims expenses amount that the insurer will pay for all claims reported during the policy period.

Limits of Liability

The maximum amount of coverage agreed upon in the insurance contract that the company would pay in the event of a loss.

Named Insured/Who’s Insured

This is one of the most important definitions in any policy. It defines who is an “insured” and who is considered insured. These definitions differ from one policy to the next and it is very important to read your particular policy to determine if all operations are covered as expected.

Negligence

The failure to exercise the proper degree of care required by a prudent person.

Policy period

Most Professional Liability policies are annual, but some are multiyear. This is the time between the effective date and expiration date of the policy.

Prior Acts

Acts that occurred prior to the current policy period may not be covered unless the current policy has a Prior Acts Date prior to the occurrence of the act or shows no Prior Acts Date.

Prior Acts Date or Retro Active Date

This is the date that if an act occurred prior to this date, even if it is reported during the policy period the act is not covered. It is very important to maintain your Prior Acts Date once established to prevent gaps in coverage.

Prior Acts Date-Retro Date Inception

This generally occurs during the 1st year of a Claims Made Policy. This is when the Prior Acts Date equals the Policy Effective date. With a policy that the Prior Acts Date equals the Policy Effective Date there is no coverage for any acts that occurred prior to the effective date of the current policy even if reported during the policy period.

Professional Services

Those services for which you are licensed, trained, and qualified to perform in your capacity as a healthcare provider in the professions shown on the Certificate of Insurance. Your services while acting as a member of a formal accreditation, standards of review, or similar professional board or committee, including the directives of such board or committee are also included in this category.

Retention Limit

A specified maximum amount of insurance that a life insurer is willing to carry at its own risk on any one life without transferring some of the risk to a reinsurer.

Risk

Uncertainty of a financial loss; term used to designate an insured or a peril insured against

Umbrella Policy

Umbrella coverage is insurance coverage that extends the terms of a regular insurance policy once coverage limits for the regular policy have been reached. Specifically, umbrella coverage is for people who want protection against a large jury award that is not covered in their standard policy.

Underwriting

The process of identifying and classifying the degree of risk represented by a proposed insured.

back to top