CARES Act and Business Insurance

CARES Act and Business Insurance

An essential step in the SBA application process is providing ‘Proof of Insurance,” or a “Certificate of Insurance” that meets the SBA Insurance Requirements. Like most insurance requirements, they’re lengthy, technical, and confusing. We’ve heard many stories already from small businesses who’ve gotten hung up on this stage of the application process, and discouraged from continuing. We don’t want insurance to become a barrier to businesses getting the stimulus that they need in these challenging times. Below, you’ll find a quick breakdown of the requirements, and instructions for making sure that your Certificate of Insurance checks all of the boxes.

Contact GDI Insurance Agency, Inc. today 209-634-2929 for your Business Owners Policy quote!

The CARES Act Includes Two Programs:

  • Paycheck Protection Program (aka PPP) // $359 Billion available – Importantly, these loans may be forgiven if borrowers maintain their payrolls during the crisis.
  • Economic Injury Disaster Loan (aka EIDL) // $10 Billion Available – EIDL loans are available directly from the SBA. They have introduced a streamlined application process, which you can access here. Additionally, SBA resource partners are available to help guide you through the EIDL application process. 

The programs provide loans through the Small Business Administration (SBA), some of which may be forgivable. This is a once in a generation situationand all small businesses impacted by the Coronavirus / COVID-19 are strongly encouraged to apply. As mentioned above, some of the loans may be forgivable to the borrower if the proceeds are used for payroll, rent, and other necessities. We know that keeping individuals employed is critical to maintaining a support system for the people who make our businesses and our economy flourish.


CARES Act and Business Insurance for Your SBA Loan

While requirements vary by business type and loan size, these are the coverages the SBA typically requires. The PPP Loan requirements are different than an EIDL loan.  A Business Owner Policy (BOP) will give you the majority of the requirements.  We will review other coverages you may need depending on the type of business you own.

business liability insurance

Business Owner Policy Key Features 

A Business Owners Policy generally combines the following types of coverage in one convenient bundle:

  • Commercial property insurance—Covers losses to property from common perils. It also covers office equipment, furniture, inventory, machinery, raw materials, computers and anything else that is vital to business operations.
  • General liability insurance—Covers a company’s legal responsibility for any harm it may cause to others, up to the policy limit. It also covers attorney fees and medical bills for anyone injured by the company.
  • Business interruption insurance—Reimburses for loss of income if a covered disaster interferes with the successful operation of the business.


Professional Liability Insurance

If your business provides a service (e.g. consulting, engineering, design, etc.), the SBA will likely require that you have a professional liability or ‘errors & omissions (E&O)’ policy. Professional Liability policies are easy to find, and can often be tailored to your specific industry. Pricing will vary based on the services you provide. Call us today for your free quote 209-634-2929.

Liquor Liability

The hospitality industry has been one of the hardest-hit by the COVID19 pandemic. Many of the bars, restaurants, concert halls and other businesses that were forced to close will need to take advantage of SBA loans under the CARES Act in order to reopen at all. If you’re one of these businesses – and serve alcohol – you’ll need liquor liability insurance. This is typically an extension of the General Liability coverage, but can also be purchased separately.

Workers’ Compensation

Barring a few specific exceptions, if you have employees you’ll need to carry Workers’ Compensation Insurance. The SBA will need to make sure that you have current coverage that at least meets your state’s requirements. Workers’ Compensation can be easily obtained, and is sometimes even provided by your payroll provider.


The Types of Insurance You Will Need for a SBA Loan

All Businesses

  • General Liability Insurance– Limits vary by business
  • Property Insurance– Full Replacement CostMust contain a ‘Lender’s Loss Payable Clause’ in favor of lender (SBA)
  • Life Insurance– Limits depend on the amount and type of other collateral available

If you have Employees

  • Workers’ Compensation– At least meeting statutory Limits

If you own Real Estate

  • Property Insurance – Must contain a ‘Mortgagee Clause’ in favor of lender (SBA)

If you sell Physical Products

  • Product Liability Insurance– Limits vary by product

If you provide a Service

  • Professional Liability Insurance – Sometimes referred to as ‘Errors & Omissions (E&O) or Malpractice Insurance

If you sell Alcohol

  • Liquor Liability Insurance– Often sold as part of your General Liability Insurance Policy.

Other Potential Requirements

  • Flood Insurance– If your business is located in a special flood hazard area, you may have additional requirements based on the Standard Flood Hazard Determination
  • Hazard Insurance – If loan proceeds will finance existing or new improvements on a leasehold interest in land, the lease must include Lender’s (SBA) or Assignee’s right to hazard insurance proceeds resulting from damage to improvements
  • Marine Insurance– If a vessel is collateral on the loan, you’ll need coverage in the amount of the full insurable value of the vessel(s) with the lender (SBA) designated as ‘Mortgagee.’

Learn About the GDI Client Philosophy!

Safety and Compliance

  • Employee Manual
  • Base Safety Programs
  • Human Resources
  • Employee Training

Insurance & Risk Management

  • Basic Policies - Liability
  • Basic Policies - Employee Benefits
  • Employee Benefits
  • Contractual Transfers

Maximization of Efficiencies

  • Accounting & Taxation
  • Legal Guidance & Council
  • Safety & Training
  • Specialized EPA Inspections & Certifications
  • Inspection Assistance
  • Insurance Visit Support

If You Think This Sounds Too Good To Be True, Here Is What Just A Few Of Our Clients Have To Say about their Insurance:

"“…$385,000 less a year than we were paying

We looked hard at all our budget items, and insurance seemed to be a big fixed expense. GDI found us a policy for $385,000 less a year than we were paying”

-CA Home Builder

"…found me coverage for $140,000 less a year

When everyone else said that was the best they could do, I called GDI, and they found me coverage for $140,000 less a year than anyone else offered.”

-CA Cement Contractor

GDI Insurance Agency, Inc. Your Trusted Business Insurance Experts

GDI Insurance Agency, Inc.

At GDI Insurance Agency, Inc. we will do the work for you to ensure you have the best protection plan for your California business automobiles.  Not only that, but as you can see, we will go the extra mile to make sure your business is protected from the inside-out. 

Located in Turlock, CA we have offices throughout California’s Central Valley, Northern California and beyond.

To put the GDI Insurance Agency, Inc. experts to work for you, simply fill click our quote button above or call our office today at 1-888-991-2929 to learn more about GDI’s Business Owner Policy  Program!