Do you have an existing small business in Alabama or are considering starting one? Business in Alabama spans multiple industries, including health care, banking, aerospace, automobile manufacturing, and of course agriculture. A warm climate, close proximity to the Gulf of Mexico, and great rivers and fishing lakes are just a few of the perks Alabamians get when operating a business in Alabama. Strong workforce ethics and competitive wages are others. Boasting four nicknames, “Cotton State”, “Yellowhammer State”, “The Lizard State”, and “Heart of Dixie”, this southeastern state holds the title of having the second largest system of inland waterways in the United States. All of this and more makes Alabama a prime location for new and expanding small business. But savvy Alabama business owners know that business insurance in Alabama is essential too. Here’s the lowdown:
Standard business insurance coverages in Alabama
A business owner’s insurance policy, also known as BOP, is an all-embracing small business insurance bundle consisting of multiple liability coverages in a single policy. A BOP joins together two primary coverages in one policy: property insurance and general liability. Buildings, equipment, and legal liabilities are the number of different coverages in a BOP. Most importantly, business owners insurance acts a means to transfer risk away from the Alabama business owner to the insurance company. Typical claims that Alabama business owners insurance coverage protects you from encompass: employee dishonesty, legal liability claims, income loss, personal injury, valuable papers, professional liability claims, equipment breakdown, fire, property claims, and money and securities. Depending on the specific risks a Alabama small business owner might face, additional add ons may supplement the BOP policy.
General liability insurance is set up to protect Alabama small business owners from a devastating financial loss arising from negligent omissions, acts, or both. These acts could caused by you or your business employees. Either way, the act results in physical injury or property damage. Accidents on the insured premise, contractual liabilities, or liabilities from products sold are all examples of the types of exposures commonly covered under general liability insurance in Alabama. The damage or injury may be through negligence or unintentional. General liability insurance in Alabama may be a stand alone insurance policy or combined with another policy.
A package policy is an insurance policy for the Alabama small business owner is one insurance policy, but combines two or more types of insurance into a package. A common package policy in Alabama combines general liability insurance (explained above) and commercial property (explained below). However, a package policy can be crafted to include essentially any type of coverage, depending on the needs of the Alabama business. A package policy is valuable for the Alabama small business owner because it enables excellent flexibility to tailor make a unique policy specifically for the select needs and risk exposures of the Alabama business.
Commercial Property Insurance is designed to provide coverage for any type of Alabama commercial property. The coverage include not only includes building, equipment, and inventory, but also, furniture, valuable papers, personal property, and supplies. Commercial property insurance protects Alabamian small business owners against a number of perils, such as fire, theft, and vandalism, as well as a number of weather events, such as a windstorm, hail, natural disasters, and lightning strikes. Commercial property insurance is recommended for a variety of Alabama small businesses, including not-for-profit agencies, service-based businesses, manufacturers, and retailers.
If you have employees working for you in your Alabama business, workers’ compensation insurance is essential. It provides coverage for your employees against employee occupational illnesses and work-related injuries. Workers’ compensation insurance in Alabama is a no-fault, state-mandated insurance system devised to compensate workers who sustained injuries or an illness while working on the job. Because the state of Alabama requires businesses (large or small) with employees to carry workers’ compensation, failure to have it opens up the doors to civil penalties and severe fines, or in some cases, result in you being liable for the medical cost of injuries suffered by their employees. Through workers’ compensation insurance in Alabama, workers receive lost wages and health care coverage in lieu of the assurance that the Alabama employee will not sue his small business employer.
Whether your business owns a fleet of vehicles or one vehicle, it’s essential to be covered with commercial auto insurance in Alabama. Commercial auto insurance in Alabama provides financial protection to small business owners and their drivers by providing coverage for a company’s use of trucks, vans, cars, or other vehicles in the course of its business. Commercial auto insurance not only reimburses for damages and medical costs resulting from vehicular accidents, but vandalism and hail damage too. In addition to employee-owned vehicles used for your small business operations, coverage may include vehicles rented, leased, hired, or owned by your company. That’s why it’s recommended that Alabama businesses purchase a commercial auto insurance policy if employees use their own vehicle to carry out work-related tasks for the business — this is known as as non-owned commercial auto insurance.
Commercial umbrella insurance in Alabama takes up where your general liability, commercial auto insurance, or other liability coverage ends. To put it another way, your existing liability policies may have limits on coverage, and may not cover all expenses should a catastrophic or unforeseen event occur. Commercial umbrella insurance in Alabama is a critical component of protection that fills in the gaps and covers certain exclusions in your primary business liability coverage. Umbrella insurance in Alabama is an fantastic way to provide added protection against property damage, bodily injury, or certain other liabilities.
Some additional business insurance coverages in Alabama to consider
Errors and Omissions insurance policies protect Alabama small businesses and individuals from litigation and claims made by clients or customers for inadequate work, negligent acts, errors, and oversights made while operating the business that resulted in a loss of income or productivity on the part of the customer or client. Errors and Omissions insurance covers legal defense and court costs, as well as settlements as specified on the insurance contract. Similar to physicians needing malpractice insurance, Alabama small business owners who provide services or consulting advice, either directly or through subcontractors, need errors and omissions insurance in Alabama.
Professional liability insurance in Alabama helps protect professionals, such as general contractors, lawyers, and financial analysts, from bearing the entire brunt of legal costs needed to defend against a claim of negligence, error, failure to perform, or omission made by a client. It also provides coverage for damages awarded in claims. The coverage focuses on financial loss on the part of the client from these types of alleged claims with respect to a product or service sold by the Alabamian professional. Professional liability insurance may provide claim coverage, even if it is groundless. It’s required by law in some kinds of professional practices, like the legal and medical professions, but Professional liability insurance in Alabama is also required by contract in other professions.
Employment Practices Liability Insurance (EPLI) provides Alabama small business employers with protection against employment-related allegations, like emotional distress, wrongful termination, discrimination, mental anguish, breach of contract, wage law violations, defamation claims, sexual harassment, false imprisonment, libel, slander, negligent hiring and promotion decisions. Employment practices liability insurance in Alabama centers around several laws and acts brought under Title VII of the Civil Rights Act of 1964, Age Discrimination in Employment Act, and Family and Medical Leave Act — all of which the Equal Opportunity Employment Commission (EEOC) enforces.
Fidelity bonds in Alabama
Fidelity bonds are a type of insurance purchased by a Alabama small business employer to protect against financial losses, such as fraud, theft or embezzlement by one or more employees. Because recovery from employee dishonesty practices is generally improbable due to the money already being spent, fidelity bonds exists an important safeguard for the Alabama small business owner who would otherwise have to take in such financial losses. While it’s important to have shields in place, such as employee screening, internal controls, and watchful supervision, sometimes it isn’t enough. Losses suffered from employee thefts of money, property, or securities are all covered under fidelity bonds insurance in Alabama. There are three common types of fidelity bonds, which are business service bonds, standard employee dishonesty bonds, and ERISA bonds.
Surety bonds in Alabama
A surety bond is a binding agreement or contract among three parties: the principal, obligee, and surety (insurance company). It represents the promise pay a specified amount should a another Alabama party fail to meet an obligation, like executing the terms of the contract. A surety bond in Alabama protects the recipient against loss should the contract not be fulfilled, while the surety company takes on the liability for nonperformance. In order to obtain monetary compensation, a surety bond is generally needed. Alabama business owners may need a surety bond to promise to pay utility bills or state sales taxes, while a contractor may need to post a bond to get work or qualify for licenses. Surety bonds are used by notary publics, mortgage brokers, health club owners, automobile dealers, medical suppliers, and others; however they are most commonly used in the construction industry, Because of the large range of small businesses that use and need these bonds, there are a multitude of types and features of surety bonds in Alabama that provide a wide range of guarantees.
Whether you’re operating a beauty salon in Birmingham or a restaurant near the port of Mobile, Alabama small businesses need to protect their assets in the event of a natural disaster, theft, fire, or other types of liabilities and risks. While many of these unforeseen occurrences will be covered by standard business insurance, some may not. Therefore, you may also need to consider some additional Alabama business insurance coverages. Business insurance is an essential component of small business success, and sensible Alabama business owners know that a sound business insurance plan custom-made to the specific needs of their business is fundamental, rather than an afterthought.