Business owners require insurance for their businesses. Many states require that business owners at the very least carry general liability coverage. But you don’t have to go to an insurance company to say, “I’d prefer one type of business insurance policy, please!” That’s because there are as many kinds of insurance for businesses as there are kinds of companies, and one size doesn’t fit all.
What is the definition of business insurance?
Business insurance is a broad term that refers to a variety of insurance options that protect any financial loss to your company. Based upon the type of policy you choose, it can be used to cover everything from damages to property, legal liability to medical costs, and much more.
What kind of insurance for business is best for your company?
There are eight primary kinds of business insurance.
- 1. General liability insurance
- 2. Workers’ compensation insurance
- 3. Insurance for commercial property
- 4. Professional liability insurance
- 5. Commercial auto insurance
- 6. Insurance for Product Liability
- 7. Policy of the Business Owner (BOP)
- 8. Cyber insurance for liability
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General liability insurance
General liability insurance protects you from business operations-related claims. If someone gets injured on the premises of your company or if you cause damage to the property of another, it will cover the costs of your defense as well as any damages awarded. Every business that interacts directly with customers must have general liability insurance.
As an example, let’s say you run a retail shop. A customer falls and slips in your store’s lobby and fractures their arm. They are suing you for bodily injury, and the judge awards them $100,000 in damages. If you’re covered by general liability insurance, the insurance company will compensate you for the damages and will cover legal fees.
The majority of policies shield your business from claims for slander and libel and slander claims.
Workers’ compensation insurance
The insurance for Workers’ Compensation, also known as “workers’ compensation” in short, gives protection for medical expenses and loss of wages if an employee gets injured during work. In some instances, it will also pay for the costs of legal defense should the employee decide to sue you. In some cases, disability insurance is offered in workers’ compensation.
Let’s take an example. For instance, suppose you have a small clothing business. If one of your employees gets injured when sewing or working, your workers’ comp insurance will pay for the costs of costs for medical treatment as well as the loss of wages.
All businesses with employees require workers’ insurance for compensation. It’s required in every state, except Texas, for businesses that have non-owner employees. Some states require that you purchase a policy through the state and not a private insurance company.
Insurance for commercial property
This kind of insurance for businesses safeguards your company’s assets from loss or damage. If your office gets damaged by an accident, or the computer equipment you have purchased is stolen, the insurance will cover the costs of repairs or replacement, and also for lost revenue. Any company that has physical assets requires business property insurance.
Let’s take an example. For instance, suppose you run an accounting company and your office has been burglarized. The burglars steal your printer, computer, as well as office furnishings. If you’re a Commercial property insurance your policy will cover the cost of repairs or replacements, and also for loss of income incurred when your team cannot work due to the absence of equipment.
Professional insurance for liability
Also called errors and omissions, this kind of insurance covers businesses from the expense of damages or injuries that happen in the course of professional services offered by the company. If you offer services to your customers and they assert that they did not perform the job properly, and the result was an expense on their part, it will cover the costs of your defense and any damages that are awarded.
Let’s take an example. For instance, suppose your profession is an architect. You design a home for a client, and they claim that the roof flooded during the initial storm due to your design being poor. If they file a lawsuit against you, the Professional Liability Insurance will pay your legal costs as well as any damages that are awarded.
Commercial auto insurance
Commercial auto insurance safeguards your business from the expense of injuries or damages that happen when you use vehicles for business. If you, or a member of staff, gets injured in an accident, this insurance will pay for the costs of repair or replacement of the vehicle, in addition to any costs for medical expenses or loss of wages. Every business that has vehicles requires commercial auto insurance.
Let’s take an example. For instance, suppose you have a food truck and are the victim of an incident. Commercial auto insurance will pay for repairs or replacements for your vehicle and any medical costs, and the loss of earnings.
Insurance for Product Liability
Insurance for product liability protects you from any claims arising out of the goods you offer. If a client claims that the product you sell caused them harm or damaged their possessions, this insurance will take care of the cost of defending yourself as well as any damages awarded.
Let’s take an example. For instance, suppose you sell a product for cleaning that causes a severe allergic reaction, which leads to hospitalization. If the consumer is suing you, then your product liability insurance will pay for the legal costs and costs that are awarded.
The policy of the business owner
A business owner’s insurance (BOP) can be classified as a form of insurance for businesses that bundles various types of insurance. The most commonly used kinds of insurance covered in a BOP include general liability, property damage, general liability interruption as well as workers’ compensation.
As an example, let’s say your small-scale business is an Ice cream shop. The shop is burgled and the cash register of your business is taken. Your business must shut down to the public for two weeks while repairs are being done. If you are covered by an owner’s insurance policy for your business, the insurer will pay you for the expenses of business loss and the costs of replacement or repairs of office equipment.
Cyber liability insurance
Cyber liability insurance shields you from injury or damages that may occur due to an incident involving data. If your company is compromised and customer information is stolen, it will cover the cost of defending yourself as well as any damages that are awarded. It also covers the costs for any publicity (PR) required to fix your reputation and credit monitoring for the affected customers.
Let’s take an example. Suppose the database of your customers at your store has been compromised, and hackers have revealed the names, addresses, along credit card details of the customers. Cyber liability insurance will compensate the victims in the event of an incident, and also provide complimentary credit monitors for the affected customers. In addition, it will cover the legal costs.
How do you decide which type of business insurance policy is best for you?
When selecting a business insurance policy, it is important to select one that will cover all your risks. Also, you should be aware of the amount of your deductible (the amount you’ll have to take out of your pocket prior to the insurance taking effect). A higher deductible could be a sign of lower insurance premiums, but it also implies more risk to your business.
The requirements for your business insurance will be contingent on the dimensions and the type of business you operate, in addition to the type of industry you operate in. If you’re unsure of the insurance coverage you require, talk to an insurance professional or broker. They’ll be able to assess your risks and assist you in choosing the appropriate policy for your company.
The Final Words
There is no business that is unaffected by risks, but you can ensure your business is protected by the appropriate insurance policies. If you know the different kinds of business insurance that are available, you can make sure that your company is protected in the event of a natural disaster or a disaster.
