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Insurance defined

By Scott Brothers CIC

OCTOBER 11, 2010
Insurance isn t a foreign language, but sometimes it may be just as confusing. Und
erstanding the different terms and types of coverage can help you make educated
decisions about coverage for your conveyor carwash business.
The following are types of coverage you should consider for protection against l
osses, as well as a brief description of the coverage. These policies are especi
ally important to conveyor operators, who typically take on more responsibility
for the customer s vehicle and also employ a larger staff than a self-serve carwas
h business.
Property insurance
Property insurance is coverage for your assets and will indemnify you for the lo
ss in value from a covered loss that damages or destroys buildings and business
and personal property. The intent of this coverage is that you will be in the sa
me financial position after the claim is settled as you were before the loss.
You can purchase this coverage separately, in a package, or in a combination pol
icy called a Business Owner s policy (BOP).
Casualty insurance
Casualty insurance promises to pay sums of money on your behalf in the chance yo
u are legally responsible for bodily injury or property damages to someone else
or their property. If your obligation is enforceable by a court of law and not e
xcluded or limited by the policy, you will have financial protection to the limi
t of coverage you purchased.
Personal and advertising injury liability
Personal and advertising injury liability coverage is usually included in the ge
neral liability policy. It refers to a variety of claims, such as:
False arrest;
Detention or imprisonment;
Malicious prosecution;
Unlawful entry or eviction;
Defamation of character;
Violation of privacy;
Using ideas that belong to someone else in your advertisements; and
Infringement of a copyright or trade slogan.
For example, you might be successfully sued by an innocent customer who is erron
eously arrested for shoplifting. Or, you might be sued because of advertising co
Employee benefit liability
Another coverage that is typically available as a part of the general liability
policy is employee benefits liability. This protects you against an error in adm
inistering your employee benefits. For instance, if you or one of your staff fai
ls to offer health coverage to an employee when the worker would be eligible to
be included you would be covered by employee benefits liability.
Another example: If an employee incurs medical expenses which would have been co
vered by the health plan, but she was not added to the policy at the proper time
, the health insurance carrier will not cover her expenses. Because you were fou
nd to be legally responsible for the oversight, employee benefit liability cover

age would pay on your behalf.

Workers compensation
Workers compensation is designed to pay on your behalf the benefits set out in yo
ur state s laws regarding the injury or death of your employees in the course of t
heir job.
Employment practices liability
This coverage is becoming more important due to an increase in the number of law
suits being filed against employers alleging wrongful acts in the course of hiri
ng, firing, promoting or failure to promote employees. Since there is no resulti
ng bodily injury or property damage, the general liability policy would not pay
any sums you may be required to pay in a judgment.
Commercial automobile liability
Commercial auto liability, including garage keepers liability, will provide fundi
ng for judgments or legal damages you may be responsible to pay because of your
ownership, maintenance or use of an automobile. The garage keepers coverage will
protect you from damages to vehicles you have in your care, custody or control w
hen servicing or storing them as a part of your business activities.
Even if you are found innocent of charges alleging you are legally responsible f
or damages, you will still have to pay fees for a defense attorney. In most casu
alty policies, defense cost is provided in addition to your limit. However, if t
he damages are equal to or greater than the limit purchased, the defense cost pr
otection will terminate.
Umbrella liability
Umbrella liability is the name the insurance industry uses to identify a policy
that effectively provides higher limits or coverage if the damages you are respo
nsible to pay as a result of bodily injury or property damage are more than your
primary policy limits.
Employee benefits program
Employee benefits is another area of insurance that can be confusing to understa
nd. An employee benefits program generally refers to group health, life insuranc
e and/or disability coverage.
Group health insurance premiums may be one of your largest insurance expenses. T
hese plans vary in many ways. Some terms to know in relation to these premiums:
Deductibles: The amount you or your employee has to pay before the insurance com
pany will pay any charges from the provider;
Co-pay: A percentage of the provider s charges that will be paid by you or your em
ployee when a charge exceeds the deductible;
Maximum out-of-pocket: The most an insured will be responsible to pay for covere
d medical expenses incurred in a policy term; and
Maximum benefit: The most the insurance company agrees to pay for covered medica
l expenses may be for the policy term, a calendar year or lifetime.
In addition, the average age and health conditions of your group will affect the
premium for your benefit plan. If you are thinking about changing your insuranc
e agent or company, don t forget to look at the dependent spouses and children tha
t are or will be covered by the plan. Is there a spouse who is pregnant or a chi
ld who is disabled? Would they have benefits for their needs under the new plan
at least equal to the benefits under the existing plan?
Life insurance as a group benefit is usually purchased as term life insurance an
d is relatively inexpensive. Again, the ages of the employees will affect the to
tal premium payable. Most often the same agent who is working with you on your h
ealth insurance will be able to provide coverage for life insurance as well.

Disability insurance is valuable to your employees but is typically expensive. T

his benefit is designed to provide a continuing income when an employee is unabl
e to work due to an accident or illness. Statistics show that employees are very
likely to have a disability lasting more than 90 days at some time during their
working lifetime. The percentage is higher than 50 percent of all workers.
Scott Brothers is president and CEO of Joplin, Missouri-based The Insurancenter.