INSURANCE & rISK MANAGEMENT FAQ

Book a 30-Minute Meeting with Our Team

Explore straightforward answers to frequently asked questions on business and personal insurance, loss control, claims, HR, and employee benefits. If your question is not listed, please feel free to reach out to our team.

Q: WHAT AFFECTS THE COST OF INSURANCE PREMIUMS?

A premium is the price of protection. It reflects (a) how likely a loss is and (b) how much the policy may pay if a loss occurs. Common drivers include:

Coverage and limits: Broader coverage or higher limits increase cost; added endorsements also raise price.
Deductible/retention: Higher deductibles usually lower premiums; lower deductibles raise them.
What is insured (exposure): Home or building value and square footage; number of vehicles and annual miles; payroll, revenue, and headcount.
Risk characteristics: Location, building age and construction, security features, driver records, and—where permitted—credit-based insurance scores.
Loss history: Frequent or severe past claims typically increase price; clean records can reduce it.
Operations and use: Higher-hazard work, heavy driving, or subcontracting generally cost more.
Safety and controls: Alarms, sprinklers, telematics, training, and written safety programs may earn credits.
Market conditions: Inflation in repair and medical costs, reinsurance pricing, and catastrophe trends affect all buyers.

Premiums vary by carrier and policy type; review coverage annually or after major changes.

Q: Do I need business insurance if I have an LLC?

Yes. An LLC limits owners’ personal liability for business debts, but it does not pay for losses or lawsuits. Insurance protects the company (and, in some cases, you) from the cost of claims and interruptions. Key points:

Liability still exists: Third parties can sue the business for injury, property damage, or errors. Without insurance, the company funds defense and judgments.
Contracts require it: Landlords, clients, and lenders often mandate specific coverages and limits regardless of entity type.
Personal exposure can persist: Owners may be liable for personal negligence, signed guarantees, or if corporate formalities are not followed.
Common policies: General liability, professional liability, property and business income, workers’ compensation (if you have employees), commercial auto, cyber, and umbrella.
Bundled option: Many small LLCs qualify for a Business Owner’s Policy (BOP) that combines property and liability at a competitive cost.

The LLC is a legal structure; insurance is the financial backstop. Most LLCs still need coverage tailored to their operations, assets, employees, and contracts.

Q: What does business insurance actually cover?

Business insurance protects (a) your liability to others and (b) your property and income. The exact protection depends on the policies you select. Common components include:

General Liability: Injuries to others, damage to their property, and personal/advertising injury (e.g., libel).
Commercial Property: Your building, contents, equipment, and inventory against covered causes (e.g., fire, theft, wind/hail).
Business Income & Extra Expense: Lost income and expenses to keep operating after a covered property loss.
Workers’ Compensation & Employers’ Liability: Employee injury/illness benefits and related employer liability.
Commercial Auto (including hired/non-owned): Liability and physical damage for business vehicles or employee use.
Professional Liability (E&O): Claims alleging financial loss from your professional services or advice.
Cyber Liability: Data breaches, ransomware, and related business interruption and response costs.
Employment Practices Liability (EPLI): Allegations of wrongful termination, discrimination, or harassment.
Umbrella/Excess Liability: Additional limits above primary liability policies.
Other options: Inland marine (mobile equipment & tools), crime/fidelity (theft & embezzlement), pollution/environmental, directors & officers (D&O).

Not typically covered unless added: Flood or earthquake, wear and tear/maintenance issues, product recall, and contractual obligations beyond the policy terms.

Coverage varies by policy and carrier. Review your declarations, exclusions, and endorsements to confirm what is (and is not covered).

Q: What is a COI?

A Certificate of Insurance (COI) is a standardized document that summarizes an insured’s active policies for a specific moment in time. It serves as proof of insurance to third parties (e.g., clients, landlords, general contractors, vendors).

What a COI shows:

Named insured and insurer(s)
Policy types (e.g., general liability, auto, workers’ compensation, umbrella)
Limits of liability and effective/expiration dates
Certificate holder and any requested notations

Important limitations:

A COI is for information only; it is not an insurance policy.
It does not add or change coverage, grant additional insured status, or waive subrogation by itself. Those rights exist only if the policy includes the proper endorsements.
Actual coverage is governed by the policy and its endorsements, not by wording in the COI’s description box.

Best practice: When contracts require specific terms (e.g., additional insured or waiver of subrogation), request copies of the endorsements or the Schedule of Forms and Endorsements to verify compliance.

Q: What is inland marine insurance?

Inland marine insurance is commercial coverage for movable property, equipment, and goods when they are in transit, on job sites, or away from your main location. It fills gaps that standard property policies (which focus on a fixed address) may not cover.

Common examples

Contractors’ equipment and tools (on trucks or job sites)
Installation floaters (materials from purchase through installation)
Builder’s risk (structures under construction)
Bailee’s coverage (customers’ property in your care: e.g., repair shops, cleaners)
Motor truck cargo (freight you haul)
Fine art/exhibitions, accounts receivable, signs, and EDP/tech equipment

How it typically works

Often written on an “all-risk” (open-perils) basis, subject to exclusions
Can be scheduled (itemized) or blanket (a pool of similar items)
Limits should reflect replacement cost and peak values while on the move

Note: Wear and tear, mechanical breakdown, and faulty workmanship are usually excluded unless specifically endorsed. Review your policy forms to confirm what is, and is not, covered.

Q: What is loss control?

Loss control is the practice of preventing or reducing the frequency and severity of losses before they become claims. It blends hazard identification, risk assessment, and practical fixes across people, property, and operations.

Core elements

Assess: Inspections, trend and claims analysis, and hazard mapping.
Control:
- Engineering controls (e.g., machine guards, sprinklers, ventilation).
- Administrative controls (e.g., written policies, training, safe-work procedures, supervision).
- Technology (e.g., telematics, sensors, alarms, camera/AI tools).
Compliance: Align with standards such as OSHA, NFPA, DOT, and local codes.
Risk transfer: Contracts, certificates, additional insureds, and waivers where appropriate.
Monitor & improve: KPIs, near-miss reporting, audits, and corrective actions.

Examples: Driver safety programs, slip-and-fall prevention, heat-illness plans, cyber hygiene, and contractor qualification.

Result: Fewer incidents, less downtime, improved insurability, and a lower total cost of risk.

Q: Do I need both commercial and personal auto insurance?

One policy should insure a vehicle based on who owns it and how it is used. Use these rules of thumb:

Personal auto fits private, non-business driving (commuting, errands, family use). Many personal policies limit or exclude business use, especially deliveries, transporting people or goods for a fee, or routine job-site travel with equipment.
Commercial auto is appropriate when the vehicle is titled to a business, employees or contractors drive it, it regularly visits client sites or job sites, carries tools/equipment, is wrapped or marked with business signage, or is a heavier or specialized vehicle (e.g., vans, box trucks, certain pickups, or vehicles with trailers).
If employees use their own cars for company errands (bank runs, deliveries, site visits), the business often needs Hired and Non-Owned Auto (HNOA) liability coverage, while employees keep their personal auto policies in force.
Rideshare and delivery work typically require specific endorsements or a commercial policy, depending on the platform and the insurer.

Insure each vehicle under the proper policy type, not both at once. When personal vehicles are used for business, confirm whether you need business-use rating, HNOA, or a commercial policy to close gaps. Coverage terms vary by insurer; review your title, use, and contracts to choose appropriately.

Q: What is considered high-net-worth insurance?

High-net-worth (HNW) insurance is specialized personal coverage designed for households with substantial assets and more complex risks than standard policies address. It typically fits when one or more of the following apply:

Asset profile: $1M+ in investable assets and/or a primary or secondary home with $1M–$2M+ replacement cost.
Complexity: Multiple residences, domestic staff, significant collections (jewelry, fine art, wine), or ownership via trusts/LLCs.
Liability needs: Desire for $5M–$100M+ in personal excess (umbrella) liability limits, worldwide protection, or specialty exposures (e.g., media, volunteer boards).

Common components:

High-value home: with extended or guaranteed replacement cost and optional cash-out.
Valuable articles: (agreed value, itemized or blanket, often with no deductible).
Auto: for luxury/exotic vehicles, OEM parts, and broader rental/new-car benefits.
Personal excess liability: high limits, broader personal injury coveragE
Watercraft/yacht and aviation: where applicable.
Optional coverages: such as flood, earthquake, cyber, kidnap & ransom, and employment practices for household staff.

Why it’s different: Broader terms, higher sublimits, tailored underwriting, and specialized claims and risk-prevention services suited to complex lifestyles and higher asset protection needs.

Q: Does high-net-worth insurance include property?

Yes. High-net-worth programs include property coverage for high-value homes and belongings, often with broader terms than standard policies. Typical components are:

Homes and other structures: Primary and secondary residences, guesthouses, pools, and gates (often with extended or guaranteed replacement cost).
Personal belongings and loss-of-use: Contents coverage plus additional living expense if you must relocate after a covered loss.
Valuable articles: Scheduled or blanket coverage for jewelry, fine art, wine, and collections (frequently with agreed value and low or no deductible).
Enhancements: Options like cash-out settlement, ordinance-or-law upgrades, and equipment breakdown. (Flood and earthquake are usually separate but can be coordinated.)

Coverage varies by carrier; confirm limits and sublimits to match rebuild costs and the value of collections.

Q: How much umbrella insurance do I need?

Choose a limit that can absorb a worst-case liability claim against your household, protecting both current assets and meaningful future earnings. For many HNW families, typical ranges are $5–25 million; complex lifestyles or public profiles may warrant $50 million+.

Key factors

Balance sheet: Net worth (including real estate equity and business interests).
Future earnings: Consider 5–10 years of income you want to protect.
Household risks: Teen drivers, multiple vehicles, watercraft/ATVs, pools, short-term rentals, domestic staff.
Activities & visibility: Board/charitable service, hosting events, media/social presence, high-risk sports, multi-state travel/residences.
Jurisdiction: Local verdict/settlement trends and plaintiff-friendly venues.
Underlying policies: Ensure home/auto/watercraft limits meet the umbrella’s minimum requirements.

Review limits annually and after major changes (new driver, home, business interest, or role).

Q: How much is flood insurance in Texas?

There is no single price; flood insurance is rated property by property. Your cost is driven by:

Location and flood risk: How likely flooding is at your specific address (distance to water, local drainage, and past flood patterns).
Elevation and foundation: How high your first floor sits relative to expected flood levels, and whether you’re on slab, pier-and-beam, or have an enclosure/basement.
Home characteristics: Age, construction, number of stories, square footage, and replacement cost to rebuild.
Coverage choices: Building and contents limits you select, plus your deductible; the higher the deductible, the lower the premium.
Occupancy and use: Primary vs. secondary residence, rental use, or short-term rental can affect pricing.
Policy source: National Flood Insurance Program (NFIP) vs. private-market policies; each rates risk differently and offers different terms.
Mitigation and community credits: Flood openings, elevated utilities, materials resistant to water, and your community’s flood-mitigation rating can reduce cost.

Price reflects the property’s flood risk and the coverage you choose. To get an accurate number, quote your exact address and building details.

Q: What is an HR consultant?

An HR consultant is a specialist who helps employers design, implement, and maintain compliant, effective people practices. Typical scope includes:

Compliance: Audits and policies for FLSA, I-9/E-Verify, FMLA, ACA, EEOC, and state rules; employee handbooks.
Talent management: Job descriptions, recruiting workflow, onboarding, performance management, and separations.
Compensation & benefits: Pay structures, market benchmarking, benefits strategy, enrollment communications, and vendor coordination.
Employee relations & training: Investigations, coaching for managers, and workplace training (e.g., harassment prevention).
Risk alignment: Leave management, documentation, and coordination with workers’ compensation, safety, and insurance programs.

When to use one: You lack in-house HR, are growing or entering new states, hiring first employees, or addressing compliance findings. Engagements can be project-based, fractional, or interim. (HR consultants provide guidance, not legal advice.)