Business owners in NH aren’t legally required to have liability insurance, but they’d be taking a massive risk to go without it and would be underinsured.
“It’s like having automobile insurance: While it’s not legally required in New Hampshire it’s a really, really good idea to have it,” says D.J. Bettencourt, commissioner of the NH Insurance Department.
Simply put, liability insurance covers business owners for mistakes that cause harm to others, says Eleanor Spinazzola, president of E+S Insurance Services in Gilford. Examples include a contractor who damages someone’s kitchen cabinets while installing an appliance, a lawyer who gives faulty advice, or a manufacturer that makes defective products could all be covered by liability insurance, Spinazzola says.
It’s critical for business owners to understand their vulnerabilities and ensure they have the right types and amounts of liability insurance, experts say.
- Evaluate Your Exposures
It’s routine for insurance agents and underwriters to ask businesses about the work they do to understand their risks. It’s critical to be honest during this conversation, Spinazzola notes. For example, a carpenter who occasionally works on roofs will still need liability insurance that covers roofing, she says.
One way to check yourself is to compare your answers to the insurance agency against the services you advertise on your website, Spinazzola says. Increasingly, underwriters are checking clients’ websites to ensure they’re not advertising for services they didn’t mention to their insurance underwriter.
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Factor Liability Insurance as an Essential Business Cost
When new business owners come to the NH Small Business Development Center, they’re encouraged to consider liability insurance and other insurance costs from the start.“Insurance is definitely a key component of a business,” says Julie Glosner, southern regional director with the NH Small Business Development Center. “The more risky [the business], the more expensive and urgent [it is] to have insurance.”
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Work with an Experienced Agent
Most businesses wouldn’t dream of doing their own taxes or defending themselves in court—they’d rely on professionals for that. The same should be true for purchasing insurance, says Dave Maloney, president of Maloney Associates Insurance in Merrimack.“An agent should be a resource in the same manner as a financial planner, accountant, banker, or lawyer to safeguard individual or business assets and liabilities,” Maloney says. “We discuss with clients the importance of the coverage, their non-tangible business assets, situations which could arise where coverage would provide value, and we offer up solutions at varying coverage levels.”
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Check your Contracts and Loans
While there’s no blanket legal requirement for business owners to have liability insurance in NH, oftentimes contracts, including state contracts, will require that a business have liability coverage. For example, private businesses that plow NH roads must have liability insurance, says Keith Nyhan, deputy commissioner of the NH Insurance Department.Lenders may also require a certain amount of liability coverage for auto, property, and other assets. At a minimum, you’ll want to make sure you’re meeting those requirements.
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Don’t be Swayed by Low Premiums
Business owners are always aiming to minimize costs. Lower premiums can sway a person to one policy over the other, because “they’re more focused on their premium than anything else,” says Brian Jacobsen, president of Immanuel Insurance Agency in Barrington.And yet, people who focus too much on the price of insurance might skimp on coverage, leaving them frustrated, exposed, and bearing bigger costs when they need to file a claim, Jacobsen says. “The lowest price doesn’t mean it’s the best match,” he says.
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Understand Most Policies Meet the Same Standards
Business owners have a lot of choice when it comes to liability insurance. At last count, there were 505 companies writing liability insurance policies in the Granite State, according to a NH Insurance Department report. That much choice can be overwhelming, but in fact most of these policies are quite similar, since they are based on standards issued by the Insurance Services Office, an organization that provides industry standards.“Everyone pretty much gets the same policy,” says James Fox, director of property and casualty at the NH Insurance Department. “All these policies are pretty much written with the same language.”
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Shop Multiple Companies
What’s most important is finding a provider that covers your type of business and will understand your unique risks and underwrite a policy that’s right for your business, Fox notes. To do that, your agent will need to approach multiple insurance providers to find the best rate. “Shop your insurance to enough insurance companies,” Fox says. -
Get Specific About the Type of Liability Coverage
There are many different types of liability coverage. General liability is most common, but policies get more specific from there, and can include errors and omissions, premises and operations, professional liability, and directors and operators policies.A general liability policy may cover some of these other areas, but often at a lower limit, Spinazzola says. That can give business owners a false sense of security when they actually need a dedicated policy for different exposures.
“Any time they throw something in, it’s not as good as buying a true policy for that exposure,” she says.
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Don’t Forget Cyber Liability
These days, “everyone needs cyber liability,” coverage, Spinazzola says. This protects you from data breaches and hacks of customer information. General liability policies will often provide a relatively small amount of cyber liability coverage, like $100,000. However, any business that retains people’s personal information should consider a dedicated policy with a higher limit,
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Consider an Umbrella Policy
A commercial umbrella policy, which covers costs that are above the limits of your other liability coverage, “can be a cost-effective way to increase a business’s liability coverage,” Maloney says. “Every business should consider adding a commercial umbrella policy.” -
Keep Your Liability Insurance Up To Date
As your business grows and evolves, offering more services and acquiring more assets and debts, it’s important to update your liability policy annually. Sometimes, you’ll need to update more frequently—for example, if you hire an employee or take on a new contract.
While seeing your premiums rise may be painful, knowing the business you’re growing is protected is well worth it. “If you don’t have liability, [damages are] coming out of your pocket,” says Jacobsen. “You’re putting your livelihood on the line here if you’re not carrying liability insurance.”
