If you own a small business in the Old Dominion State, this information will help you understand Virginia 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 Richmond, Chesapeake, Norfolk, Virginia Beach, Arlington, Alexandria, Portsmouth or Newport News, having sufficient commercial liability coverage is an important part of any small business plan in Virginia.
A small business is defined as any company with fewer than 500 employees. Small business is vital to Virginia’s economic well-being. Of Virginia’s 646,012 small businesses in 2008 (the latest data available), 151,505 were small employers, accounting for more than 48.3% of the state’s private-sector jobs. Another 494,516 were one-person operations with no employees.
Source: SBA Virginia Small Business Profile 2011.
About Commercial Liability Insurance for VA Businesses
Commercial liability insurance (also called business liability insurance and commercial general liability insurance) protects your Virginia 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
Virginia Minimum Business Insurance Requirements
Commercial Liability Insurance is not mandatory for businesses operating in Virginia. Virginia is one of four states that still uses a contributory negligence standard. Under this system, a plaintiff’s reward is decreased by his or her percentage of fault. Virginia juries are likely to find for the plaintiff, but generally give lower awards. Only 7% of Virginia’s personal injury awards exceeded $1 million between 1997 and 2002. However, accidents and lawsuits (legitimate and frivolous) still happen. If you own property or other valuable assets you would be wise to invest in sufficient commercial general liability coverage for your Virginia business to limit your risk exposure.
How Much Virginia Commercial Liability Insurance Should You Carry?
Each situation is unique, but as a general guideline, the type of Virginia business you operate or products you manufacture should determine how much Virginia 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
Virginia 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 Virginia Small Business
Virginia requires that anyone who employs three or more persons, whether full or part time, carry workers compensation insurance. Partners and sole proprietors with no employees are not required to carry workers compensation. Members of a limited liability company are also exempt. Corporate officers may choose to reject coverage for accidents but not for occupational diseases.
Virginia 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
Virginia Bureau of Insurance
This agency is responsible for regulating all insurance policies sold in the state, including commercial liability coverage.
Bureau of Insurance
P.O. Box 1157
Richmond, VA 23218-1157
Virginia 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 maintain a Virginia District Office in Richmond. Get the link to the Virginia 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