Insurance Handbook - Alaska Department of Community and ...

Insurance Basics
Business Insurance
pensation provides payments to injured workers, without regard to who was at
fault in the accident, for time lost from work and for medical and rehabilitation
services. It also provides death benefits to surviving spouses and dependents.
Each state has different laws governing the amount and duration of lost income
benefits, the provision of medical and rehabilitation services and how the system
is administered. For example, in most states there are regulations that cover
whether the worker or employer can choose the doctor who treats the injuries
and how disputes about benefits are resolved.
Workers compensation insurance must be bought as a separate policy.
In-home business and businessowners policies (BOPs) are sold as package policies
but do not include coverage for workers’ injuries.
Other Types of Business Coverages
The first four coverages discussed below are different types of liability insurance
policies available to businesses. The fifth is a form of life insurance. There are
also specialized liability policies geared to specific types of businesses.
1. Errors and Omissions Insurance/Professional Liability
Some businesses involve services such as giving advice, making recommendations,
designing things, providing physical care or representing the needs of
others, which can lead to being sued by customers, clients or patients claiming
that the business’ failure to perform a job properly has injured them. Errors and
omissions or professional liability insurance covers these situations. The policy
will pay any judgment for which the insured is legally liable, up to the policy
limit. It also provides legal defense costs, even when there has been no wrongdoing.
2. Employment Practices Liability Insurance
Employment practices liability insurance covers, up to the policy limits, damages
for which an employer is legally liable such as violating an employee’s civil
or other legal rights. In addition to paying a judgment for which the insured is
liable, it also provides legal defense costs, which can be substantial even when
there has been no wrongdoing.
3. Directors and Officers Liability Insurance
Directors and officers liability insurance protects directors and officers of corporations
or nonprofit organizations if there is a lawsuit claiming they managed
the business or organization without proper regard for the rights of others. The
policy will pay any judgment for which the insured is legally liable, up to the
I.I.I. Insurance Handbook www.iii.org/insurancehandbook 13