A small business is defined as any company with fewer than 500 employees. Small business is vital to Colorado’s economic well-being, accounting for almost 98% of all state employers. Of Colorado’s 541,927 small businesses in 2008 (the latest data available), 12,7264 were small employers, accounting for more than 50% of the state’s private-sector jobs. Another 414,663 were one-person operations with no employees.
Source: SBA Colorado Small Business Profile 2011
About Commercial Liability Insurance for CO Businesses
Commercial liability insurance (also called business liability insurance and commercial general liability insurance) protects your Colorado business from financial loss resulting from claims of injury or damage cause to others by you or your employees. A policy typically covers:
Bodily Injury – physical damage to a person other than an employee at your place of business and injuries caused by you or an employee at a client’s home or work place.
Property Damage – damage caused by you or an employee to someone else’s property.
Personal Injury – libel, slander, copyright infringement, invasion of property or privacy, wrongful eviction, false arrest and similar acts that cause damage to a person’s reputation or rights.
Advertising Injury – losses caused by your advertising
Legal Defense and Judgments – costs to defend against real and frivolous suits and judgments up to the limit of your coverage. Note this generally does not include punitive damages for negligence or willful misconduct.
Colorado Minimum Business Insurance Requirements
Commercial Liability Insurance is not mandatory for businesses operating in Colorado. Colorado is a fault state. The cap for non-economic damages is $468,010, which may be increased to $936,030 by the court upon a showing of clear and convincing evidence for the increase. Economic damages are not capped. Punitive, or exemplary, damages are not routinely awarded in Colorado, where the plaintiff must prove fraud, malice or willful and wanton conduct to collect. The statute of limitations for any personal injury suit and products liability is 2 years. However, if injuries are sustained in a vehicle accident, the SOL is 3 years. Accidents and lawsuits (legitimate and frivolous) do happen in Colorado. If you own property or other valuable assets you would be wise to invest in sufficient commercial general liability coverage for your Colorado business to limit your risk exposure.
How Much Colorado Commercial Liability Insurance Should You Carry?
Each situation is unique, but as a general guideline, the type of Colorado business you operate or products you manufacture should determine how much Colorado commercial general liability insurance you need. A good rule of thumb for most small businesses is between $500,000 and $1 million. However, if yours is a high-risk business such as the building trades or has a high volume of interaction with the public such as a restaurant or retail business, you should consider increasing your coverage. Note that if you operate out of your home, your homeowner’s or renter’s insurance has limited coverage for business liability and loss.
How Are Premium Costs Assessed?
Colorado commercial liability insurance premiums are based on a number of factors including the types of service or products you provide, the number of people you employ, how long you’ve been in business, and your claims history. Coverage is typically capped at a specific dollar amount for your policy period.
Other Insurance to Consider for Your Colorado Small Business
Colorado requires that anyone who employs one or more persons, whether full or part time, carryworkers compensation insurance. Sole proprietors with no employees are not required to carry workers compensation. Other exemptions include certain casual maintenance or repair work done for businesses totaling less than $2,000 per year, part-time domestic, maintenance and repair work done for a private homeowner, licensed real estate agents and brokers working on commission and independent contractors. For full information about requirements and exemptions, contact the Colorado Division of Workers’ Compensation at www.coworkforce.com/DWC.
Colorado requires that all drivers carry minimum automobile insurance. If you use your car or truck for business, it is recommended that you purchase a commercial vehicle policy.
Colorado Small Business Administration
The SBA is an independent agency of the federal government created to aid, counsel, assist and protect the interests of small business concerns and maintains a District Office in Denver. Get the link to the Colorado SBA at www.sba.gov.
National Association of Insurance Commissioners (NAIC)
This is an organization of insurance regulators from the 50 states, District of Columbia and the five U.S. territories. NAIC provides a forum for the development of uniform policies when appropriate. It also offers an online form for filing complaints, reporting suspected insurance fraud and downloading key financial information about insurance carriers at www.naic.org.
Insurance Information Institute (III)
This organization’s mission is to improve public understanding of insurance – what it is and how it works. Visit III at www.iii.org.