If you own a small business in the Kentucky , this information will help you understand Kentucky Commercial Liability insurance and protect your business and your personal assets from legal claims and settlements that can spell financial ruin. Whether you work in Louisville, Frankfort, Lexington, Bowling Green, Owensboro or anywhere else in the Bluegrass State having sufficient commercial liability coverage is an important part of any small business plan in Kentucky.
Fast Facts About Kentucky Small Business
A small business is defined as any company with fewer than 500 employees. Small business is vital to Kentucky’s economic well-being, accounting for nearly 97% of all state employers. Of Kentucky’s 339,747 small businesses in 2008 (the latest data available), 69,175 were small employers, accounting for more than 49% of the state’s private-sector jobs. Another 270,572 were one-person operations with no employees.
Source: SBA Kentucky Small Business Profile 2011.
About Commercial Liability Insurance for KY Businesses
Commercial liability insurance (also called business liability insurance and commercial general liability insurance) protects your Kentucky 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.
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.
Property Damage – damage done to another person’s property by you or an employee in the course of conducting your business.
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.
Kentucky Minimum Business Insurance Requirements
Commercial Liability Insurance is not mandatory for businesses operating in Kentucky. Kentucky is a pure comparative negligence fault state. The plaintiff can recover even if he or she is up to 99% at fault. There are no personal injury caps in Kentucky. The statute of limitations for general personal injury and products liability is 1 year. Accidents and lawsuits (legitimate and frivolous) do happen in Kentucky. If you own property or other valuable assets you would be wise to invest in sufficient commercial general liability coverage for your Kentucky small businesses.
How Much Kentucky Commercial Liability Insurance Should You Carry?
Each situation is unique, but as a general guideline, the type of Kentucky business you operate or products you manufacture should determine how much Kentucky 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
Kentucky 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 Kentucky Small Business
Kentucky requires that anyone who employs one or more persons, whether full or part time, carry workers compensation insurance. Sole proprietors with no employees are not required to carry workers compensation. Partners, corporate officers and LLC members are generally exempt. Other exemptions may apply. Contact the Kentucky Labor Cabinet for details. www.labor.ky.gov
Kentucky 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.
Employee Disability Insurance
BOP – Business Owner’s Package
E&O – Errors & Omissions
EPLI – Employment Practices Liability Insurance
Commercial Property Insurance
Regulating Agency and References
Kentucky Department of Insurance
This agency is responsible for regulating all insurance policies sold in the state, including commercial liability coverage. Visit their website at insurance.ky.gov. Call 502-564-3630. Write P.O. Box 517, Frankfort, Kentucky 40602-0517.
Kentucky 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 Louisville. Get the link to the Kentucky 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 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.