What Is Business Insurance ?
Business insurance coverage protects businesses from losses due to events that may occur during the normal course of business. There are many types of insurance for businesses including coverage for property damage, legal liability and employee-related risks.
Companies evaluate their insurance needs based on potential risks, which can vary depending on the type of environment in which the company operates.
What does business insurance cover ?
Business insurance isn’t a specific coverage. It’s a term used to describe one or more individual coverages that protect a small business. The range of protection depends on the specific coverages a business carries. For example, “business insurance” can refer to a single coverage, such as general liability, but it can also include many more.
Which coverages do I need ?
Each business has unique needs, but nearly all should consider general liability. It’s the most common coverage, protecting businesses against a wide variety of situations involving third-party injuries or property damage (e.g. slip and falls, broken windows).
If you or your employees drive for work-related tasks, you’ll probably need commercial auto insurance. Most states require that you carry workers’ compensation if you have employees.
Not sure what you need? Answer five simple questions to find which coverages you should consider for your small business.
Why do I need business insurance ?
You need it to protect against severe financial loss. Without it, your business could be crippled by a single incident. For example, a customer was injured and you’re legally responsible. Without insurance, the medical bills and legal fees could become impossible to afford. Don’t let this happen to you.
Do I need business insurance if I’m a sole proprietor ?
Yes. As a matter of fact, sole proprietors are personally responsible for their business’s debts. This means their personal assets, such as bank accounts or property, might be targeted to satisfy an outstanding business debt. Accidents are unavoidable, but the financial impact they can cause is something you should plan for no matter how small your business is.
The Right Types of Insurance for Businesses
There are many types of insurance options out there that business owners can get. Insurance helps protect your company from different risks that can come up during normal operations. Choosing what business insurance you need can seem overwhelming, but we’re here to help.
Many business owners start with a Business Owner’s Policy (BOP) for their small business insurance needs. It combines three essential coverages :
- General liability insurance
- Commercial property insurance
- Business income insurance
We’ve made the BOP blast preventer customizable, so you can add other business insurance covers for even more protection. For example, if your business provides professional customer service, you may want to take out a professional liability insurance policy. It can help protect your business from allegations that it has misrepresented the professional services provided.
We know that every business is different. That’s why we’re here to help you get the right types of business insurance.
Types of Business Insurance
Several types of business insurance that small business owners might consider, including the following :
Professional Liability Insurance
Professional liability insurance insures against negligence claims that result from mistakes or failure to perform. There is no one-size-fits-all professional liability coverage. Each industry has its own unique concerns that should be addressed.
Property insurance covers equipment, signage, inventory, and furniture in the event of a fire, storm or theft. However, it doesn’t cover mass-destruction events like floods and earthquakes. If your area is at risk for these issues, you’ll need a separate policy. Another exception is personal property that is very high value and expensive—this is usually covered by purchasing an addition to the policy called a « rider. » If there’s a claim, the property insurance policy will either reimburse the policyholder for the actual value of the damage or the replacement cost to fix the problem.
Homeowner’s policies don’t cover home-based businesses like commercial property insurance covers businesses. If you’re operating a home-based business, inquire about additional coverage for equipment and inventory.
Product Liability Insurance
If your business manufactures products to sell, product liability insurance is very important. Any business can find itself named in a lawsuit due to damages caused by its products. Product liability insurance protects a business in such cases.
Any vehicles used for business should be fully insured. At the very least, businesses should insure against third-party injury, but comprehensive automobile insurance will cover the vehicle in an accident, as well. If employees are using their own cars for business, their own personal insurance will cover them in the event of an accident. One major exception is if a person is delivering goods or services for a fee, including delivery personnel.
Business Interruption Insurance
Business interruption (or continuation) policies are a type of insurance that is especially applicable to companies that require a physical location to do business, such as retail stores or manufacturing facilities. Business interruption insurance compensates a business for its lost income during events that cause a disruption to the normal course of business.
Four steps to buy business insurance
- Assess your risks. Think about what kind of accidents, natural disasters, or lawsuits could damage your business. For example, if your business is located in a commercial area that is at risk from seasonal events such as fire or hail storms, commercial property insurance will help protect against loss.
- Find a reputable licensed agent. Commercial insurance agents can help you find policies that match your business needs. They receive commissions from insurance companies when they sell policies, so it’s important to find a licensed agent that’s interested in your needs as much as his or her own.
- Shop around. Prices and benefits can vary significantly. You should compare rates, terms, and benefits for insurance offers from several different agents.
- Re-assess every year. As your business grows, so do your liabilities. If you have purchased or replaced equipment or expanded operations, you should contact your insurance agent to discuss changes in your business and how they affect your coverage.