7 • Wrongful practices by professional service providers (e.g.,
BUSINESS INSURANCE DC DOING BUSINESS GUIDE 2018/2019 79
healthcare providers, lawyers and consultants).
Small businesses that have these types of exposure may need
to secure specialized policies, such as employment practices
liability, commercial auto liability, medical professional
liability and pollution liability.
OTHER TYPES OF LIABILITY INSURANCE:
• An umbrella liability policy provides more comprehensive
protection than a standard policy. Umbrella policy
coverage limits are typically within the $1 million to $5
million range and are appropriate for business owners
who have large assets or may be especially vulnerable to
lawsuits. Umbrella policies are a type of excess liability
coverage that provide coverage not available in the
underlying policy.
• Crime insurance protects businesses from theft and
malicious damage, such as employee embezzlement.
• Cyber security insurance or internet business insurance
covers web-based businesses for damages caused by
computer hackers and viruses.
• Professional liability protects against lawsuits that
may claim the business has been negligent or made an
error or omission while performing services. Policies
that fall under professional liability can include errors
and omissions (protects business professionals against
mistakes or oversights) as well as directors and officers
(protects an organization, usually a corporation, from
errors made by the people in charge).
• An excess liability policy provides additional or higher
limits of coverage to only those covered items or subjects
identified in the underlying policy.
COMMERCIAL AUTO INSURANCE
All motorized vehicles, whether used for personal or business
purposes, need auto insurance. Automobile liability insurance
covers medical expenses for injured persons and damages to
the property of other individuals because of a motor vehicle
accident caused by the insured’s negligence. Automobile
liability insurance is mandatory in the District of Columbia.
All commercial enterprises that maintain one or more vehicles
must meet the financial responsibility laws by posting bond,
through self-insurance, or by providing a certificate of liability
or an insurance policy issued by an insurer.
While the types of coverage provided by personal and
commercial auto insurance policies are similar, there
are important distinctions. Typically, commercial auto
insurance policies have higher liability limits; for example,
this type of policy may have a liability limit of $1 million.
They may also have provisions that cover rented and other
non-owned vehicles, including employees’ cars driven for
business purposes.
Several factors related to ownership and use of vehicles
determine whether a personal or commercial policy is
appropriate. These include:
• Who owns or leases the vehicle, an individual or the
business as an entity?
• Who drives the vehicle, the owner or the employees?
• How is the vehicle principally used: for transporting
people, delivering packages, or carrying hazardous
materials? Business owners may also want to consider
the purchase of collision and comprehensive coverage to
guard against damage to the vehicle.
FLOOD INSURANCE
Flooding can be due to poor drainage systems, rapid
accumulation of rainfall, large snowmelt and broken water
mains. Properties on a hillside or in a sloping area can be
damaged by mudflow. Flood insurance is required by law for
buildings in high-risk flood areas as a condition of receiving
a mortgage or deeds of trust from a federally regulated or
insured lender. For more information on flood insurance
coverage, visit floodsmart.gov or contact the District of
Columbia Department of Insurance, Securities and Banking
for a list of licensed insurance agents.
GROUP LIFE INSURANCE
Some business owners offer group life insurance to
employees. Group life insurance can be part of an employee
benefit plan or a voluntary offering.
For policies paid for by a business owner, the benefit can
often be equivalent to a full year’s salary, an amount that may
not be sufficient for some people. These types of policies
can be viewed as an added benefit or supplement to other
life insurance coverage that an employee may have. If an
employee wants additional coverage on top of what an
employer is willing to purchase, amounting to double or triple
the employee’s salary, the employee may have to pay for it.
/floodsmart.gov