Last week’s questions and answers with Bomba Insurance Agency helped demystify why gift basket insurance provides peace of mind for our personal and professional lives.
The last four questions continues this valuable education.
Q: Can I deduct the cost of business insurance on my income taxes?
A: Yes; this cost is part of doing business and is deductible.
Q: What else is covered in a business insurance policy?
A: There’s lots of coverage, including:
- Liability for bodily injury
- Property damage, including losses that occur after the sale (also known as product liability)
- Personal/advertising injury in case of slander or defamation of character (you are dealing with the public and false advertising claims)
- Some form of no-fault medical payment coverage
- Other types of coverage that can insure your business property, equipment, inventory, supplies, and loss of business income
Q: If I’m sued, what about attorney or lawyer costs?
A: These costs are included with the insurance policy, but it’s wise to ask your agent or company if the cost of defense is what’s known as “inside or outside of the policy limits.”
If inside the policy limits, that means they subtract the cost of defense from your insurance coverage. That’s not the best way to go, as the cost of defense is usually more than the lost, and you may run out of coverage.
Outside the policy limit coverage is best. That means all legal fees are covered with no limit, and it is not subtracted from your liability coverage.
Q: What else should I look for in an insurance policy?
A: Make sure that the insurance company is an “admitted” company to your state and that they are at least an A-rated company.
Admitted means they maintain offices in your state and therefore are usually covered by your own state’s “insurance guarantee fund” in case they become insolvent when you have a loss.
This information, as well as an insurance company’s rating, should be available from your agent and can also be checked by a reputable rating company such as A.M. Best, an independent rating company that is not funded by insurance companies.
Most importantly, ask lots of questions, and make sure you understand what you are buying. There is no such thing as a stupid question because you’re smart enough to ask!
What questions or comments do you have? I encourage you to share your feedback in the comments section below.
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