Business insurance is a form of risk management that keeps you and your company from losing money if something bad happens. Rorie Devine, the CTO of Gro. The team, says that it’s important for businesses to get insurance because it helps cover the costs of property damage and liability claims.
According to what Devine said to Business News Daily, “as a business owner if you don’t have business insurance, you could be compelled to pay for expensive damages and legal claims against your firm out of your own pocket.” Even if you don’t require insurance very often, just one claim might pay for the cost of the insurance right away. If you don’t have business insurance, anything like this could put an end to your company regardless of how much it costs.
Keeping your business safe from being sued
Some of the most important types of business insurance protect you from being responsible for something. Your business and the services you offer will determine what kind of liability insurance you need.
Let’s look at some of the most common kinds of liability insurance.
Insurance for general liability
General liability insurance, also called business or commercial liability insurance, is important coverage for many types of claims, such as bodily injury, property damage, personal or advertising injury, medical payments, products-completed operations, and damage to rented premises.
General liability insurance is something that almost every small business owner or contractor should have. When you’re looking for small business insurance and comparing policies, remember that your rates will depend on how your business is set up.
Business owners policy (BOP): If you want general liability insurance and coverage for your property, you can get them all in one policy called a BOP, or a business owners policy. A BOP includes coverage for commercial buildings and movable property, as well as liability coverage for customer injuries, property damage, and product-related claims.
Many BOPs also have coverage for business interruption, which pays for lost income if your business has to close because of a covered claim. This type of coverage is great for owners of small and medium-sized businesses like restaurants, retail stores, and wholesalers. Keep in mind that your employees are not covered by BOP insurance.
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Insurance for employment practices (EPLI)
Employment practices liability insurance is often helpful for small businesses with employees. If an employee brings a claim against your company for wrongful punishment or termination, sexual harassment, discrimination, negligent evaluation, breach of employment contract, or mismanagement, this sort of insurance will protect you from legal liability. benefits to employees, or the negligent or intentional infliction of emotional anguish.
Some insurers offer EPLI as a separate type of coverage, while others add it to their BOP. What the terms and conditions of your policy are will depend on the type of coverage you choose. EPLI costs vary based on the type of business you run, how many employees you have, and how risky your business is.
Liability insurance for professionals
Professional liability insurance, also called error and omissions (E&O) insurance, protects businesses that offer professional services. E&O insurance is often used by B2C businesses to protect themselves from claims that their services caused customers to lose money or get hurt.
One type of professional liability insurance that is often used is doctors’ malpractice insurance. This type of insurance is also important for consultants and financial advisors, who offer professional services to their clients. Different industries and professions will have different costs for professional liability insurance. For example, a CPA is likely to make more than a doctor.
Professional liability insurance for contractors
If you are in the design-build or construction management business, you are required to buy some kind of contractors’ professional liability insurance. This coverage protects professionals from mistakes or losses that might happen when they design, engineer, and build a building. It can also keep you from making mistakes when working with third-party vendors.
Liability insurance for directors and officers (D&O)
You need D&O insurance if your business has a board of directors or an advisory group. This insurance protects the assets of your directors and officers if they are sued personally for wrongdoings in the way your company is run (e.g., failure to comply with regulations governing the workplace, dishonesty, theft of intellectual property, misrepresentation of company assets, or misuse of company cash are examples of illegal conduct.
Insurance for the management
Management liability insurance is a mix of coverages that protect private, public, and nonprofit companies from different board-level risks. It protects against the risks that come with running a business, and organizations with a board of directors buy it. A typical management liability insurance package covers D&O liability, fiduciary liability, and employment practices liability.
Insurance for product liability
Product liability insurance gives you more protection and security than a standard product warranty or guarantee. This coverage protects your business if a product hurts or kills a third party, or if a third party sues your business because of a product. For example, a customer could sue you if your product had a lithium battery that caught fire and hurt them. In this case, your product liability insurance will cover you.
Note from the editor: Looking for the right business liability insurance? Simply fill out the vendor inquiry form that can be found below, and one of our vendor partners will get in touch with you to discuss your needs.
Protecting your business property and equipment
Damage to uninsured company property can be expensive to fix, and that property is crucial to running your business. Different kinds of property insurance can protect your buildings, cars, and other things. What kind of insurance you need will depend on whether you own or rent the property.
Commercial property insurance
Property insurance for businesses safeguards the company’s tangible assets in the event of unforeseen circumstances like fire, theft, or natural disasters.
The level of property insurance coverage ranges from basic to comprehensive, and so do the prices. Most small and medium-sized businesses with physical assets need some form of property insurance coverage, though. Your business lender will insist on this protection unless you own the building entirely (with no mortgage or liens).
Homeowners Insurance
Check the business coverage under your home insurance if you run a home-based business or keep business property at home. Homeowners’ insurance usually only covers a small amount (like $2,500) of business property or equipment stored in your home, and some policies don’t cover business property at all.
People who have a home-based business should add a business endorsement to their homeowner’s policy or buy a separate policy for their business. A lender will insist on a homeowners policy until the mortgage is paid off, the same as they do with commercial property.
Business renters insurance
Businesses that rent one or more spaces need to have business renters insurance. It will cover things like fires, floods, accidents, and building or property damage caused by natural disasters that happen in space. This kind of insurance covers a lot of the same things that other policies do, but only for rented spaces.
Personal auto insurance
If you own your own business and use your personal car for work, you may be covered by your personal auto insurance. If you own your car, truck, or van and only occasionally use it for work, you might be able to get by with standard personal auto insurance for business use. But if you drive a car owned by your employer, if your car is only used for work, or if you need more coverage, you may need commercial auto insurance.
Commercial auto insurance
Commercial auto insurance is like personal auto insurance in that it protects your cars, trucks, or vans if they get damaged, someone gets hurt, or you have to pay for someone else’s damages. insurance, on the other hand, gives you more coverage, like property and liability trailer exposure, exposure to loading and unloading, coverage for hired vehicles, coverage for vehicles you don’t own, and higher coverage limits.
Taking care of your bosses and employees
Your team is one of the most valuable parts of your business. It’s important to protect yourself and your employees with insurance. How you and your team decide what kind of insurance you need (and legal requirements). Find out about the most common types of insurance you and your team can get.
Compensation for workers
Workers’ compensation insurance, also called workers’ comp or workman’s comp, pays for a worker’s medical bills and a portion of their lost wages if they get sick or hurt at work. If an employee takes workers’ compensation benefits, they give up their right to sue your company for the illness or injury. Often, the law makes you get this insurance.
Insurance for people who can’t work
Disability insurance is like workers’ compensation in that it pays for a worker’s lost wages while they are temporarily unable to work because of an illness or injury. But disability insurance will pay for injuries or illnesses that happened on or off the job, while workers’ comp will only pay for things that happened at work. Sometimes the law makes you get this kind of insurance.
Insurance for a key person
Key person insurance also called “key man” or “key woman” insurance, helps your business make up for lost income if a key executive dies. Your business pays the premium while the key person is still alive and then gets a death benefit when they die. These benefits can be very important if you want to keep your business running or find someone to do their job.
Insurance for life
You and the other people who work for your business can get life insurance. This is the same as key person insurance in that it helps a beneficiary financially if you die. Having life insurance can give you peace of mind that your family or business partners won’t have to pay a lot of money because you died.
Keeping your business safe from bad things
If something bad happens to your business out of the blue, you’ll want to be covered. One disaster can cost a business that isn’t insured more than it’s worth, which can lead to irreparable financial loss and lawsuits. You will need more than one type of disaster insurance to protect your business.
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