Business Insurance FAQ

Answers to frequent questions about coverages and liabilities from our Business Insurance customers

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Commercial Umbrella Coverage

I already have Business insurance. Why would I need Umbrella coverage?

No one expects to encounter a loss that exceeds the limits of his or her policy, but unfortunately in today's business environment, liability lawsuits -- which often result in large jury awards -- do happen. As the name implies, Farmers Commercial Umbrella goes "over the top" of your existing Farmers business liability coverage, offering $1 million or more of added coverage for your business.

Can a large loss affect my company's earnings?

The truth is that it's not just your current assets which are at risk, but your potential future earnings as well. Look down the road and picture where your business will be five or 10 years from now. A large loss now could easily destroy any hopes of a bright future. Insolvency courts' records are filled with examples of companies that thought they weren't at risk!

Is this additional coverage expensive?

Umbrella limits, often many times those provided by your current policies, are available for a fraction of the cost of the primary policies. When most business owners examine the facts, they find that a Commercial Umbrella offers them a low-cost way to assure their assets remain theirs -- even in the face of a multi-million dollar loss.

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Surety Bonds

Does Farmers provide Surety Bonds?

Absolutely! We can write both Commercial Surety and Contract Bonds. You can take comfort in knowing that, should you need a bond, there to meet your need is the expertise and commitment to service of your Farmers agent, and backing of the Farmers Insurance Group of Companies.

What types of Commercial Surety Bonds are available?

Over 150 classes and types of bonds are available. Here are some examples.

Bonds for the legal field include:

  • Administrator/Executor
  • Trustee in Liquidation
    • Plaintiff
    • Garnishment
    • Replevin
    • Injunction
    • Indemnity to Sheriff
  • Guardian/Conservator
  • Trustee in Reorganization
    • Defendant
    • Discharge
    • Counter-Replevin
    • Dissolve Injunction
    • Appeal, Stay of Execution

Bonds for license, permit and miscellaneous needs include:

  • Agriculture
  • Brokers, Agents, Adjusters
  • Motor Vehicle
  • Professional Licenses
  • Regulatory/Compliance
  • Excise, Sales, Use, and Consumer Tax
  • Lost Instrument
  • Notary Public
  • Public Official

What types of Contract Bonds are available?

Contract bonds for the construction field include:

  • Bid
  • Labor and Material Payment
  • Maintenance
  • Performance
  • Subcontract Performance

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Pollution Liability

Should I be concerned about pollution liability?

Under the doctrine of "cradle to grave responsibility," you may be held liable even when you have followed the rules. Simply put, anyone dealing with the care, custody, or control of hazardous materials may be responsible for that material -- forever! It is the way the environmental protection laws are set up.

What are the financial implications and how might my business be affected?

The financial obligations stemming from pollution liability claims vary widely, depending on the nature of the event. Needless to say, they are usually expensive!

A recent settlement on the West coast brought to a close a tragic story of eight families whose lives were permanently altered by contaminated soil and ground water from a factory adjacent to their children's elementary school. The court-awarded settlement exceeded $2 million dollars and state investigators were forced to shut down the factory operation due to the extent of the contamination.

Although this example may demonstrate a worst-case outcome, many similar cases of environmental claims litigation and settlements are placing a financial hardship on businesses like yours across the country.

What can I do?

One of the best ways to protect yourself and your business is with a Pollution Liability Policy. This policy offers the protection your company needs to help mitigate costly litigation and damages today's environmental protection laws may impose. Farmers offers two types of pollution policies to help meet your specific needs.

What does each policy cover?

The Farmers Pollution Policy for Storage Tank Systems covers:

  • Leaks, spills or releases from scheduled storage tanks
  • The EPA financial responsibility for storage tanks
  • The cost of remediation to contaminated property
  • Bodily injury and property damage
  • Defense costs within the policy limits

The Farmers Pollution Policy for Dealer and Repair includes storage tank systems and offers the following additional features:

  • Coverage for an event occurring on-site from other than a storage tank
  • Liability for transportation of materials off-site
  • Coverage for an event at a non-owned, scheduled disposal site

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Employment Practices Liability

Employment practices lawsuits -- why should I worry?

You've read the headlines. You've heard about big settlements awarded in wrongful termination and employee harassment cases. They only apply to big business, right? Wrong! You may just as easily find yourself faced with a similar lawsuit from a current or former employee.

What would the financial implication be and will it affect my business?

Legal expenses to defend an allegation of improper employment practices (even if you prove the charges groundless) average $100,000 and related jury awards are rising annually. For many small businesses, the unanticipated expense can have multiple effects ranging from an impact on cash flow to having to close your doors for good.

What can I do?

One of the best ways to protect yourself and your business is to acquire an Employment Practices Liability Insurance (EPLI) policy. This policy offers the protection your company needs to help mitigate costly litigation and damages today's employment environment can produce.

What will the policy cover?

Farmers EPLI policy is designed to cover your business in the event of claims brought by employees, board members, leased workers and temporary workers as a result of any of the following acts, whether real or alleged:

  • Wrongful refusal to hire; failure to promote; demotion or reassignment.
  • Wrongful termination (including breach of implied contract)
  • Employment related misrepresentation
  • Harassment, coercion, discrimination
  • Slander, defamation, libel or invasion of privacy

How can I reduce my risk of a claim?

Farmers EPLI policy provides you with complimentary risk management services, which include instant access to human resources professionals who are able to offer guidance and information. These services are designed to help you and your employees avoid the situations that may lead to claims of this nature.

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Flood Insurance

Do I need flood insurance?

Here are a few facts that you may want to consider before deciding:

  • Flood damage -- unlike wind damage -- is not covered by business or homeowners insurance policies.
  • Approximately 30 percent of all flood claims occur in low to moderate risk areas.
  • In high-risk areas, there is a one-in-four chance of being flooded in a 30-year period, and you are four times more likely to be damaged by flood than fire.
  • Federal Disaster Loans, if available, must be repaid with interest -- flood insurance does not.
  • Flood insurance is affordable.
  • Flood damage is not.

Who writes this coverage?

The National Flood Insurance Program (NFIP) provides the coverage. It is sold through private insurers like Farmers as part of an agreement with the federal government and can be purchased even if you have experienced prior flooding.

What coverage is available?

Businesses can purchase coverage with limits up to $500,000 for buildings and $500,000 for contents; condominium associations can obtain building coverage up to $250,000 (times the total number of units); unit owners can buy a separate contents policy for up to $100,000; homeowners can purchase a maximum of $250,000 for buildings and $100,000 for contents; and coverage is also available to renters.

Since the U.S. government sets annual flood insurance premiums, your rate is the same from any insurer -- so why not sign on with Arizona Insurance Agency to ensure on-going service from the most committed staff?

What are the program requirements?

Anyone can buy flood insurance if his or her property is located in a community that participates in the National Flood Insurance Program. Condominiums, business enterprises, homes and apartments are all eligible. Even renters may purchase flood insurance for their possessions.

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