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Liquor Liability Insurance for Small Business

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If you run a business that sells alcohol—a bar, restaurant, club, etc.—you already know how alcohol changes how you operate from other small businesses. When you sell, serve, or manufacture alcohol, you’ll need a liquor license, plus, you must abide by a variety of alcohol-specific regulations. And because selling alcohol can be a potentially lucrative, but also risky part of your business, you may want to look into an additional small business insurance option—liquor liability insurance.

What exactly is liquor liability insurance and what does it cover? We’re here to answer these questions—and more. In this guide, we’ll explain everything you need to know about liquor liability insurance for small business, including coverage, cost, where to get it, and how to decide if it’s right for your business.

Liquor liability insurance: An overview

Let’s start with the basics: What is liquor liability insurance? In essence, liquor liability insurance (sometimes also referred to as dram shop liability insurance) is a form of business liability insurance that protects small businesses that manufacture, sell, or serve alcohol. This type of insurance typically covers claims of bodily injury or property damage made against your business as a result of actions by intoxicated persons to whom you served or sold alcohol.

Whereas most businesses are protected from these types of claims by their general liability insurance, most general liability insurance excludes coverage for alcohol-related claims, making this form of insurance particularly worthwhile for restaurants, bars, breweries, wineries, and any business that deals with alcohol as part of their daily operations.

Additionally, liquor liability insurance is even more important for businesses operating in states that impose dram shop laws. In short, dram shop laws hold businesses responsible for the actions of an intoxicated person to whom they served alcohol, especially if the person served was visibly intoxicated. These laws vary in their specifics, but on the whole, they make it easier for your business to be sued for alcohol-related incidents. Currently, 43 states have dram shop laws.

Which businesses need liquor liability insurance?

Although we discussed this briefly above, it’s worth expanding upon which businesses need liquor liability insurance.

On the whole, any business that sells or serves alcohol as part of its daily operations should consider investing in liquor liability insurance. These types of businesses may include:

  • Restaurants

  • Wineries or breweries

  • Event facilities

  • Liquor stores

  • Grocery stores that sell alcohol

Additionally, it’s worth noting that depending on the state where your business is located, you may be required to get liquor liability insurance in order to be approved for a liquor license. There may be other scenarios in which your business is required to have this type of insurance as well—for example, if you’re applying for a business loan, you may need to show proof of liquor liability insurance to a lender.

Liquor liability insurance coverage

All in all, whether or not your state imposes a dram shop law, liquor liability insurance can be essential to protecting your alcohol-serving or selling business. With this in mind, it’s important to understand what is and isn’t included in liquor liability insurance coverage.

As we mentioned above, liquor liability insurance generally covers any bodily injury or property damage caused by an intoxicated person that your business served alcohol to, even after they leave your business location. More specifically, this may include:

  • Assault and battery: This type of insurance can cover you if an intoxicated person is involved in a fight or other physical altercation and someone sues.

  • Sexual assault or harassment: If an intoxicated person assaults or harasses someone, you’ll be protected under this type of insurance.

  • Property damage: You’ll be covered if an intoxicated person damages someone else’s property.

  • Bodily injury: If an intoxicated person injures themselves and sues, liquor liability insurance will protect you.

  • Drunk driving: If an intoxicated person drinking at your business leaves and drives a car, liquor liability insurance will protect you in the case of a lawsuit from any resulting damages or injuries.

In these situations, liquor liability insurance will cover legal costs—court costs, lawyer’s fees, and settlements—if your business is sued. This being said, however, coverage can vary based on the individual policy and the state your business is located in (because each state has its own regulations and laws regarding dram shop liability).

On the other hand, there are certain situations and instances that are not covered under liquor liability insurance. These can include:

  • Underage drinking: Liquor liability insurance will not protect you from claims involving underage drinking.

  • Business property damage: Your business property is not covered under liquor liability insurance. For this type of protection, you’ll need commercial property insurance.

  • Libel and slander: Other types of damage, like libel and slander, are not covered under this type of business insurance.

  • Sickness or illness from manufacturing: If your business manufactures alcohol and customers become sick as a result of a production error, this will more than likely be covered under product liability insurance instead of liquor liability insurance.

Liquor liability insurance vs. host liability insurance

In discussing what’s included in liquor liability coverage, it’s important to establish the difference between liquor liability insurance and host liability insurance. Whereas liquor liability insurance protects businesses that sell or serve alcohol as part of their typical operations, host liability insurance protects your business if you serve alcohol or allow it to be consumed at an event you host.

Typically, host liability insurance is included in your business’s general liability insurance policy and therefore covers you against any bodily injuries or property damage lawsuits that occur as a result of the actions of an intoxicated person who drank alcohol at an event you hosted. Essentially, host liability insurance protects businesses that are not in the day-to-day practice of serving or selling alcohol.

Liquor liability insurance cost

Now that we have a better sense of what is and isn’t covered under liquor liability insurance, let’s discuss the cost of coverage. How much does liquor liability insurance cost for a small business?

Unfortunately, as with most business insurance policies, the cost of liquor liability insurance will vary. Much of this variation is due to the different laws states impose on businesses that serve or sell alcohol. In Michigan, for example, any retailer applying for a liquor license must be able to show a liquor liability insurance policy of at least $50,000 in coverage. Generally,  it’s safe to say that the stricter the dram shop laws in your state, the more expensive your liquor liability insurance policy will be.

Additionally, the cost of your policy can also be dictated by a number of other factors, including the size of your business, the type of business (bar vs. grocery store, for example), how much alcohol you sell, your claims history, and of course, the actual amount of coverage you want with your policy.

For example, according to money management site Howmuch.net, the average liquor liability insurance cost ranges from $900 to $1,200 per year. Online insurance marketplace, Insureon, on the other hand, reports that their customers often see median annual costs ranging from $255 (for retailers) to $545 (for restaurants) to $2,060 (for bars). These costs, however, also depend largely on the amount of your policy—for bars, the median coverage amount from Insureon is $2 million; for restaurants, it’s $1 million.

This being said, to mitigate the cost of your liquor liability insurance, you can work with an insurance provider to see if you can incorporate this type of insurance on top of your other insurance policies, in what is referred to as a business owners policy (BOP). By bundling different types of business insurance with the same provider, you can often receive your policy at a lower rate.

Moreover, simply by lowering your risk for a claim or lawsuit, you can often find more affordable options for liquor liability insurance. Showing an insurance provider that you’ve hired professional employees, trained them thoroughly, and mitigated your business’s risk in other ways (like enacting a strict ID policy and serving non-alcoholic beverage options) can help lower the cost of your policy.

Where to get liquor liability insurance

Do you think your business needs liquor liability insurance? If you’re searching for this type of insurance, you might consider starting with your current business insurance company, if you have one. As we just mentioned, you may be able to save money by bundling your liquor liability insurance with existing policies.

On the other hand, if you don’t yet have business insurance or your current provider doesn’t offer this type of insurance, you might look into the following options:

Work with a broker or agent

Although working with an insurance broker or agent can be more expensive than finding liquor liability insurance on your own, it can be worthwhile if you’re buying business insurance for the first time. An insurance broker or agent will work with you to discuss your business needs, get quotes from different providers, and compare the quotes you receive to determine which one can offer you the best policy.

To ensure that you’re using a trustworthy insurance broker or agent, you may ask for recommendations from fellow business owners or consult any resources offered by your local chamber of commerce.

Use an insurance marketplace

For a more affordable way to get liquor liability insurance, you might decide to utilize an insurance marketplace like Insureon or CoverWallet. These companies allow you to enter your business information online and based on this information, they generate quotes from a variety of different insurance providers. You can then compare the best options and choose the one that works for you.

Both Insureon and CoverWallet partner with well-known insurance providers like Liberty Mutual, Hiscox, Chubb, and more.

Go directly to an insurance provider

Of course, you can always get liquor liability insurance by working directly with a company that offers this type of policy. As we mentioned above, if you already have an existing business insurance policy, you’ll likely want to start by reaching out to your provider to see if you can bundle liquor liability insurance with the coverage you already have.

If this scenario isn’t applicable to you, you can look to local or national insurance companies to meet your liquor liability insurance policy needs.

As an example, Progressive offers liquor liability insurance through the commercial branch of its business. You can add this type of insurance to your general liability policy or purchase it separately. You can apply for a quote from Progressive online or call to speak with an insurance representative. According to their website, they determine liquor liability insurance costs based on sales, profession, location, and claims history.

You might also consider a specialized provider, like the Food Liability Insurance Program (FLIP). FLIP is an online insurance provider that offers policies for a variety of food- and beverage-based businesses. You can purchase a bundled policy for liquor and general liability, or liquor liability insurance on its own. Although the final price will vary based on your state, according to the FLIP website, annual coverage for both liquor and general liability insurance can start at $498, or $199 for liquor liability only.

FLIP also provides one- to three-day liquor and general liability insurance coverage for businesses that need special event insurance. You can buy a FLIP insurance policy online and call or live chat with a support representative to address any questions or concerns.

Ultimately, whichever route you use to get your liquor liability insurance, you’ll want to be sure to get multiple quotes to compare and ensure you’re getting the best and most affordable policy for your business.

The bottom line

At the end of the day, liquor liability insurance is essential for businesses that serve or sell alcohol as part of their daily operations. Although facing a lawsuit may seem unlikely, it’s better to be prepared in case you do face one—and liquor liability insurance can help cover any legal costs you may incur.

Therefore, you’ll likely want to consider investing in this type of insurance if your business serves or sells alcohol, and especially if it’s required by your state or financial institution (once again, some lenders will require liquor liability insurance for business loans).

This being said, it’s important to remember that due to the different dram shop laws and liquor license requirements from state-to-state, the amount of insurance you need, as well as the cost, will largely depend on where your business is located. Additionally, factors like the type of business you run, your size, and your insurance claims history can also influence the coverage you need and how much it will cost.

As Robert Fiorito, vice president with the global insurance brokerage HUB International Northeast, told Fundera: “The most important defense against liquor liability is prevention through education. It is imperative that restaurants implement a liquor liability training program for staff members who will serve alcoholic beverages to customers. However, to truly protect the business and transfer the risk, it is extremely important to obtain a liquor liability insurance policy, either as standalone coverage or as part of a restaurant and bar package policy. An experienced insurance broker should understand carrier requirements and the state’s dram laws to design a policy that best suits their clients’ unique needs.”

Ultimately, although you certainly have options to find and get liquor liability insurance on your own, due to the variable nature of this type of insurance, as Fiorito suggests, you may also decide to consult an insurance expert or your business attorney for advice on finding the right policy and provider for you.

This article originally appeared on Fundera, a subsidiary of NerdWallet.

The Best Homeowners Insurance in Georgia for 2021

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Homeowners in Georgia can expect to pay right around the national average for their home insurance. A typical annual premium in the Peach State is $1,599, just slightly higher than the national average of $1,585.

NerdWallet analyzed rates from 11 different insurers in the state to determine the best homeowners insurance in Georgia. Keep in mind that these rates are estimates and depend on many different factors, so yours may vary.

Best homeowners insurance companies in Georgia

NerdWallet rating

Average annual premium

5.0

NerdWallet rating 

Country Financial

4.5

NerdWallet rating 

State Farm

4.5

NerdWallet rating 

4.5

NerdWallet rating 

4.5

NerdWallet rating 

*USAA is available only to active military, veterans and their families.

You can customize your homeowners policy with numerous add-ons, but below are the types of coverage that generally come standard:

Type of coverage

What it does

Pays to repair or rebuild the structure of your home.

Other structures

Covers damage to unattached structures such as a shed or fence.

Personal property

Pays to repair or replace personal belongings such as furniture or clothing.

Additional living expenses

Pays for hotel stays, restaurant meals or other expenses if you have to live elsewhere while your home undergoes covered repairs.

Covers legal expenses and damages if you’re responsible for injuries to other people or their property.

Medical payments

Covers injuries to guests in your home, regardless of fault.

Here’s a little bit more about each company and the extras it offers.

Chubb

Although Chubb is one of the most expensive insurers in the state, its standard policy includes coverage options for which others often charge extra. For example, homeowners who buy Chubb’s Masterpiece policy can receive the full amount it costs to replace damaged or destroyed personal items rather than the items’ depreciated value.

Country Financial

Country Financial offers three different levels of homeowners insurance, including its Premier level, which helps pay to repair damage caused by household accidents such as countertop burns or paint spills. The company also offers a sizable number of add-ons like coverage for earthquake damage and expenses associated with identity theft.

State Farm

State Farm’s standard “increased dwelling limit” coverage may appeal to homeowners because of the financial cushion it provides if you need to rebuild your home. As long as the home is insured for the amount State Farm estimates it will cost to replace it, the company provides up to an additional 20% of that amount should costs go up while rebuilding.

Travelers

Travelers’ standard policy doesn’t come with some of the coverage options provided by other insurers. Travelers does, however, offer unique add-ons such as green home coverage that can help cover the cost of using sustainable materials to rebuild or repair your home.

USAA

If you’re an active military member or veteran, or are a family member of one, USAA offers several benefits that normally cost extra from other insurers. Identity theft coverage and replacement cost for damaged or stolen personal items are just two of the benefits available to policyholders in most states.

Cheapest homeowners insurance rates in Georgia

NerdWallet looked at the rates from each insurer in all 777 ZIP codes in Georgia to find the lowest home insurance premiums in the state. We found a statewide average annual premium of $1,599, but your rate may vary depending on where you live. The difference between the cheapest and most expensive rates in Georgia was nearly $950 per year.

Here are the five cheapest homeowners insurance rates in Georgia:

And here’s a look at all the available rates:

What to know about homeowners insurance in Georgia

Here are a few things to keep in mind as you evaluate your options for home insurance in Georgia:

  • You may be subject to a “hurricane deductible.” Georgia has been hit by many major storms — including hurricanes — and if it happens again, homeowners may have to pay a hurricane deductible before their insurance will kick in. This deductible is a percentage of your home’s insured value rather than a flat dollar amount. So, if your home is insured for $300,000 with a 5% deductible, you have to pay the first $15,000 of damage from a storm before your insurer will give you a cent.

  • You should also consider flood insurance. Flood damage isn’t typically covered by homeowners insurance, so you’ll likely need a separate flood insurance policy to be covered. That can be a good idea especially if you live on the coast or in an area prone to flooding, but your home might also be vulnerable to flooding without you knowing it. The Federal Emergency Management Agency’s flood maps can help give you the flood risk at your specific address.

  • Tornadoes might be a threat. Georgia sees an average of about 30 tornadoes each year, with the peak season occurring in the spring. A standard homeowners insurance policy typically covers damage caused by a tornado, along with any additional living expenses you might have if you’re temporarily displaced from home because of tornado damage. However, if the tornado is caused by a hurricane or tropical storm, your hurricane deductible may apply.

  • Your rate will vary depending on where you live. Annual premiums in Georgia tend to be a little more expensive in the southern part of the state, generally costing about $200 more per year. To see the average rate in your county, take a look at the county-by-county breakdown:

Home Insurance for Military and Veterans: What You Need to Know

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When it comes to insuring their homes, veterans and current members of the military have plenty of choices. A couple of insurance companies serve the military exclusively, with features designed to accommodate the needs of those on active deployment. Other insurers offer military discounts.

Here’s what to know about buying homeowners insurance for veterans and military.

Home insurance companies for veterans and military

The two insurance companies below exclusively serve veterans and members of the military.

USAA

USAA offers not only insurance but also bank accounts, credit cards, mortgages and other financial products for military families.

The company’s homeowners policies have several features tailored to the needs of military policyholders. Unlike most insurers, USAA will cover your personal belongings even if they’re damaged by an act of war, and it won’t reduce your coverage for a house left vacant while you’re deployed. It also covers military uniforms without a deductible for service members on active or reserve duty. The company includes homesharing coverage standard for those who rent out their home on vacation rental websites (which could come in handy if you’re seeking a little extra income during a deployment).

Although USAA homeowners policies are available in every state and Washington, D.C., coverage options may vary by location.

USAA membership is open to:

  • Active-duty members of the U.S. Armed Forces, National Guard or military reserves.

  • Veterans who’ve retired or been honorably discharged.

  • Precommissioned officers.

  • Spouses and children of USAA members.

Armed Forces Insurance

AFI sells both its own military home insurance policies and those of partner companies such as Nationwide, Safeco and The Hartford, allowing members to choose their preferred rate and package. Policies are available in all 50 states and Washington, D.C.

The company offers a variety of ways to customize your policy, including optional endorsements to cover identity theft, water backup damage and valuable personal items such as jewelry. AFI members can access a free online tool called MyHomeWorks, which helps you find ways to make your home more efficient.

When it comes to financial strength, Armed Forces Insurance isn’t rated as highly by credit rating agency A.M. Best as the other insurers mentioned in this story, including AFI’s partner companies.

You’re eligible for Armed Forces Insurance membership if you fall into one of the following categories:

  • Active-duty member of the U.S. Armed Forces, National Guard or military reserves, or their current or surviving spouse.

  • Veteran who’s retired or been honorably discharged, or their current or surviving spouse.

  • Active or retired civilian employee of the Department of Defense.

  • Member of a service academy, including Merchant Marines and ROTC cadets.

  • Child or former spouse of a current or former AFI member.

  • Former AFI member.

  • Active, retired or former commissioned officer of the U.S. Public Health Service or National Oceanic and Atmospheric Administration.

Home insurance companies with military discounts

The following companies sell insurance to a broad population but offer discounts specifically for veterans and members of the military.

Farmers Insurance offers a discount of 2% to 8%, depending on the state, to active, retired, reserve and honorably discharged members of the military. The discount is not available in all states.

Kemper Insurance offers homeowners insurance discounts to active military members, veterans and junior and senior cadets at a military academy.

Liberty Mutual offers savings on homeowners insurance for active, retired or reserve members of the military. Discounts may vary by state.

Keep in mind that you may find cheaper home insurance with another company, even if it doesn’t offer a military discount. Every insurer calculates its rates slightly differently, so it’s worth seeking home insurance quotes from at least three companies to make sure you’re getting the best deal.

Special considerations for military home insurance

It’s never a bad idea to read your homeowners policy carefully to make sure you understand your coverage, but it’s particularly important for active members of the military who expect to be deployed. You might find certain gaps in coverage that you’ll want to be aware of.

For instance, homeowners policies typically offer at least some coverage for your personal belongings when you’re away from home, but they commonly exclude damage related to war. So if you’re deployed to a combat zone, you may not have adequate coverage for the clothing and personal effects you bring with you. As noted above, USAA is an exception, covering up to $10,000 for items lost due to war, with no deductible.

You’ll also want to keep an eye out for vacancy clauses in your policy. You may find that if you’re insured with a company other than USAA, coverage is limited for certain types of damage if your home has been vacant for a minimum period of time, usually 30 or 60 days. If you expect your deployment to be longer than that and no one else will be living in your home, reach out to your agent or insurer to discuss your options.

Some people elect to rent out their home to others during deployment. If you choose this alternative, you may need to swap your homeowners policy for a landlord policy to make sure your home is properly covered. Again, your agent or insurer can advise you.

8 Natural SEO Strategies to Increase the Search Rankings of Your Website

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Designing your website and webpages concerning what search engines, such as Google, think vital and giving helpful information to end-users is what SEO is all about. Many internet users are looking for websites relevant to a specific keyword or key phrase that Google delivers.

So, if you want to make your website successful and attract a large number of potential clients, you need to stick to specific tried-and-true SEO strategies.

Let’s talk about how to get your website to rank higher in Google search results.

Ensure that your website is optimized for local searches

On a worldwide scale, search engine optimization has become a critical component of marketing efforts for firms. Many businesses have been penalized due to failure to use the most recent search engine optimization technique. 

As a result, they’ll have first to focus some of their advertising efforts on satisfying the algorithm’s requirements. So, unless you have a lot of time on your hands, it’s a good idea to outsource a competent SEO service that can work with you, focus on your local efforts, and help you get the results you want. 

When you first start your Google adventure, make sure you offer as much information about your company as possible so that your potential clients have all they need to decide whether you are the right firm for them to work with.

Enhance the user experience on your website

The top four variables – website users, time spent on site, page views per session, and bounce rate – must all be prioritized to achieve top rankings. You must do the following to enhance these four factors:

  • Make effective use of white space to make your text more readable. 
  • Increase the speed of your website’s pages
  • Use eye-catching CTAs
  • Highlight essential elements of your products with bullet points
  • Use practical and imaginative photos
  • Captivating headlines or the H1 tag
  • Responsiveness on desktop and mobile

SEO content optimization should be unique

The goal of content marketing is to boost traffic and enhance Google rankings. If you provide high-quality content that is 100 percent unique,  your users stay on your website for at least 30 seconds to a minute. If they visit your subpages, you have a good chance of improving your page ranking and website visibility. 

Make sure you’re utilizing all of the correct keywords in your content and that it’s written with the target audience in mind. Concentrate on quality rather than quantity, and only create a high-quality, unique material in all forms.

Increase conversion rates by improving page speed

Faster web pages boost conversion rates and user engagement. So, if your website lacks quality, it’s conceivable that your rating will suffer as a result of more visitors bouncing. When it comes to ranking your website better in search engine results, page speed is critical. As technology advances, so does people’s patience and attention span. People nowadays expect to obtain information in seconds, and a page speed of at least 90+ is required to attract the most visitors.

Get more visitors by fixing broken links

One of the best methods to increase traffic and establish your website’s authority is to have excellent links, but if your links aren’t working, it may derail all of your hard work. Your website’s broken links can be damaging in two ways:

  1. They have the potential to degrade user experiences.
  2. They have the potential to damage your organic SEO results.

It can be damaging to your website if it displays problems such as 404 or others. Use Google Analytics and Search Console (Google webmaster tool) to figure out where you’re going wrong and take action on that error page as soon as possible to address the problem.

Increase the speed of your website to increase conversions

It is critical to enhancing your website’s page speed to boost your rankings and convert more visitors. If your website takes a long time to load, users are more likely to leave and never return. As a result, make sure your web pages load quickly to increase conversions and attract more visitors.

People nowadays expect to receive information quickly and prefer to visit websites that offer them accurate information in a short amount of time. To improve your Google ranks and position, your average page speed should be more than 90.

Google voice searches should be optimized

Voice-activated technology has improved in accuracy and human-likeness throughout time. When searching for something on the internet, everyone expects quick results. While entering a question into a search box is fast, speaking the same query into your smartphone and receive the same results. 

You can type approximately 40 words per minute and talk about 150 words per minute on average. Consumers are already utilizing it to discover what they’re searching for. In this case, the time it takes for your mobile website to load is crucial.

If you want to be found via voice search, you’ll have to keep up. The typical spoken search results page loads roughly twice as fast as a web page, so you’ll have to keep up. Page speed, as explained above, is a ranking factor for Google. Thus the quicker, the better.

Use long-tail keywords to increase traffic

If you want your website to get a lot of traffic, utilize long-tail keywords that explain the solution to the user’s inquiry. These keywords are lengthier, more precise terms that visitors are more likely to employ when they are nearing a point of sale or utilizing voice search.

For example, if you search for ‘cheese,’ the search engine will return a large number of results; but, if you search for ‘Mozzarella cheese near me,’ you are far more likely to obtain the most focused results. That’s what long-tail keywords do: they help you locate answers to your precise questions.

Conclusion

It’s critical to keep your SEO in control as Google’s algorithms and other upgrades get more complex. Keep these SEO techniques in mind whether you have an existing site or plan to create one to get the best results. Google is growing smarter, and so should your SEO strategies, from excellent content and pictures to long-tail keywords, voice search, and strong backlinks.

The post 8 Natural SEO Strategies to Increase the Search Rankings of Your Website appeared first on Zac Johnson.

Equipment Breakdown Coverage: Which Businesses Need It, Top Picks

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Equipment breakdown coverage, also known as boiler and machinery insurance or mechanical breakdown insurance, protects businesses against financial losses and expenses related to sudden, accidental and unexpected equipment breakdowns. For businesses that rely on machinery such as computers, manufacturing equipment or refrigerators to generate revenue, such a policy could save them from a major financial hit. Many insurers provide equipment breakdown coverage as a standalone policy or as an add-on to a business owner’s policy or commercial property policy.

Do I need equipment breakdown coverage?

Any business that relies on equipment to generate revenue should consider purchasing commercial equipment breakdown coverage. Policies typically pay for:

  • The cost to repair or replace damaged equipment, including time and labor costs.

  • Lost income.

  • Damaged inventory.

  • Other losses resulting from equipment failures.

  • Expenses incurred while equipment is repaired or restored.

For example, if you run a restaurant and your refrigerator breaks down, the food inside might spoil. As a result, you won’t be able to serve certain dishes from the menu and may lose revenue. Equipment breakdown coverage can minimize your losses, covering the costs to replace or repair the refrigerator and the costs to replace your inventory and make up for lost income.

Equipment damage is often not covered by other insurance policies. While commercial property insurance protects your equipment from outside dangers, such as fires or storms, it doesn’t protect against operator error, motor burnout or accidental damage.

Commercial equipment breakdown coverage can protect your business from losses that are experienced as a result of damaged equipment and that are not covered under other policies.

What is covered under equipment breakdown coverage?

Equipment breakdown policies cover accidental or direct damage that commercial property insurance and warranties typically exclude, such as power surges, short circuits and other mechanical or electrical breakdowns.

The details of equipment breakdown coverage can vary based on the policy and provider. Many policies cover the following types of equipment:

  • Computers and communication equipment: Business phone systems, voicemail systems, fire alarm systems and security systems.

  • Mechanical and manufacturing equipment: Elevators, motors, engines, water pumps, assembly lines and other specialized production or manufacturing equipment.

  • Electrical equipment: Transformers, electrical panels and cables.

  • Central air conditioning and heating systems.

  • Boilers and high-pressure equipment.

Your commercial equipment breakdown coverage comes into play in the case of:

  • Power surges.

  • Short circuits.

  • Motor burnouts.

  • Operator error.

  • Loss of air pressure.

  • Other mechanical or accidental breakdowns.

What isn’t covered by equipment breakdown coverage?

Like any type of business insurance policy, there are limits to what equipment breakdown insurance will cover. Here are a few examples of what it won’t apply to:

  • Software systems: Computer hardware is covered, but software systems are not. You should purchase cyber liability insurance to protect software.

  • Ordinary wear and tear: Equipment failures that occur due to the equipment’s age or ordinary wear and tear are not covered by equipment breakdown insurance.

  • Natural disasters: Your commercial property insurance or specialized insurance, such as flood insurance, will cover equipment failures that occur as a result of fires, storms, explosions and other natural disasters.

Cost of coverage

Most insurance companies link the price of equipment breakdown coverage to the value of the insured equipment. On an annual basis, it can cost $25 to $50 per $50,000 of equipment coverage.

The best way to get a specific price for equipment breakdown coverage is to request a quote from multiple insurance companies. These factors and more will impact the cost of your coverage:

  • Total value of the insured equipment: The more valuable the insured equipment is, the higher the premiums.

  • Age and type of insured equipment: Older equipment leads to higher rates.

  • Deductible: A lower deductible translates to higher premiums.

  • Selected coverage for repairs and replacements: More coverage comes at an additional cost.

Top equipment breakdown coverage providers

Insurers might sell equipment breakdown insurance as a standalone policy, but most often it’s added to a commercial property policy or a BOP.

The Hartford: Best for simple add-on coverage

The Hartford offers equipment breakdown coverage as part of a BOP. Its BOP typically includes general liability insurance, commercial property insurance and business income insurance. On top of equipment breakdown coverage, you can also add endorsements — essentially, insurance add-ons — for data breach coverage or income for off-premises utility services.

Hartford Steam Boiler: Best for businesses with unique equipment risks

HSB is the largest equipment breakdown coverage in North America and specializes in underwriting equipment breakdown coverage, making it a good choice for businesses that might have more unique equipment risks. Businesses that own a lot of alternative energy or electrical equipment, for example, could get more customized coverage through HSB than other providers. It offers stand-alone equipment breakdown coverage and insurance that you can add to an existing commercial property policy or a BOP.

Travelers Insurance: Best for comprehensive equipment coverage

Travelers Insurance stands out with a product called EnergyMax 21, which offers more comprehensive equipment breakdown coverage compared with competitors. If you have irreparable equipment, Travelers will compensate you 125% of its replacement value to help you upgrade to newer technologies. It’ll also reimburse you an extra 5% on a covered loss to help you purchase environmentally sustainable alternatives to your current equipment. Travelers also has licensed inspectors on staff to keep your equipment running well.

Nationwide Insurance: Best for customer service

With Nationwide Insurance, you can buy equipment breakdown coverage on its own or add it as an endorsement to a Nationwide BOP. The BOPs are specialized for specific industries, such as retail, office and food service. If you have questions about your policy, Nationwide has a 24-hour customer service phone line.

A version of this article was first published on Fundera, a subsidiary of NerdWallet.

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