“Insurance 101”
Small Business Insurance
as one piece of your
Business Contingency
Plan
Business Insurance 101
Key Objectives:
Understanding your risks
Protecting your assets
You Don’t Have To Be A Statistic

One of every Five businesses
experiences a major
disruption each year.

Small business owners have
a higher probability of
being impacted by a
disaster.

Small business owners have
fewer recovery resources
and a lower tolerance for
losses. (Compared to BIG Business)

According to NAMIC 60% of
Businesses do not fully
recover after a Business
Interruption of 3 months or
more

As many as 90% of small
businesses do not have a
business continuity plan
in place.

Business Interruption
Claims from Hurricane
Katrina cost Insurance
Companies between $5
and $9 Billion
Dollars*
* Towers Watson 2005
Report Hurricane Katrina:
Analysis of the Impact on
the Insurance Industry
Basic Property & Liability
Exposures

Damage to property (building, contents)

Loss of revenue
 Loss of Income
 Extra Expense

Theft (General, Employee)

Liability arising from business operation
(ex: customer slips/falls)
Standard Business Owner’s Policy
 Section
•
•
Property
Loss of Income
 Section
•
•
I
II
CGL Liability
Medical Payments
Business Owner’s Policy – Typical
Built-ins
 Buildings
– for owners.
 Contents
– Furniture, equipment, supplies, inventory (Business
equipment
Includes permanently attached
Personal Property)
 Tenant
improvements and betterments – for
Tenants
 Signs
 Loss of Income (Incredibly Important!)
 Liability
Business Owner’s Policy – Other
Options
Money
(on and off premises)
Computer Property
Temperature change
Employee Dishonesty
Increased Liability Limits
Mechanical Breakdown Coverage
Workers Compensation

Coverage
• Part A – Statutory limits
• Part B – Employer’s liability
• Rarely used
• Must waive Part A Settlement and sue in court
(BI by accident/by disease/policy limit)

Premium
• Estimated Payroll
• Employees
• Owners
 Annual Audit
• Premium Adjustment
Small Business Relationship Management
Inland Marine
Workers'
Compensation
Disability
Business Policy
Business Auto
ENOL
Business
Continuity
Planning
Mutual Funds
Bank Products
Specialty
Products
Bonds
Commercial
Umbrella
Business Life
Retirement Plans
Business Planning & Continuation
 Business
Life Insurance
• Key person Life Insurance
• Group Life Insurance
• Buy/sell agreements
 Business
Retirement Plans
 Health Savings Account
 Long-Term Care Insurance
Why Plan?
•
Business viewpoint
•
Insurance viewpoint
•
◦ Protect assets and investment
◦ Remain competitive/preserve reputation
◦ Process Improvement
◦
◦
◦
◦
Reduce property damage
Reduce down time and expedite recovery
Insurability
Due diligence – obligation to inform/annual review
Community viewpoint
– Preserve jobs/contribute to tax base
• It’s is outlined, encouraged and
supported by Federal Legislation
– Public Law 110-53 Title IX, Section 24
– Signed into law August 2007
– Section 524 encourages voluntary accreditation &
Certification
– PS Prep
You Can Survive a Disaster
Comments – Questions – Follow up
David M. Hall, CPCU, ALCM
Section Manager for Innovation and Small
Business Solutions, State Farm Companies
Disaster Resistant Business Council Chair
Stephenson Disaster Management Institute Senior Fellow
CPCU Interest Group Governor
david.hall.cap5@statefarm.com