Basic Business Insurance Types and How They Work?
By Space Coast Daily // February 4, 2021
There are many things that you have to worry about when you start a business. One of the main things you have to consider is business insurance. If things do go wrong, and chances are they will, you will need insurance to help your business recover.
You will expose yourself to a lot of risk as a business owner, and insurance is the best hedge against taking huge risks. The good news is that businesses can use various types of insurance to protect themselves against these risks. The following are the main types of business insurance:
Professional Liability Insurance
Professional liability insurance is also known as insurance against errors and omissions. It covers a business against liability arising from mistakes caused by negligence or failure to perform adequately.
Professional liability insurance is mainly for businesses that offer services instead of products. Errors in judgment or many other factors can lead to mistakes that professional liability insurance will protect you against and keep your business operational.
When you are sued for making the wrong recommendation or wrong advice, you can use the insurance policy to pay for the settlement. Each industry has its own concerns, so professional liability insurance policies will vary from industry to industry.
Your business probably has a physical location, which means you own some property. To protect your business from any damage the property might suffer. In some cases, you may choose to rent property rather than own it. Commercial property insurance will also protect your business from damage to any rented equipment.
You should note that property insurance will typically protect your property against damage done by other people. For damage caused by events such as natural catastrophes, you will need separate insurance policies.
Worker’s Compensation Insurance
Your employees are your business’s most valuable asset. However, if anything happens to them, your employees can turn into your worst nightmare. One of the insurance coverages that all businesses should have is worker’s compensation insurance. The insurance policy will protect you against any claims made by employees who fall sick or are injured while on the job.
The policy will cover the treatment, medical costs, and death claims resulting from an employee being injured, sick, or dies while working for your business.
You should get the insurance policy regardless of the type of work that the business does. A sole proprietor without any employees, on the other hand, does not require this type of insurance coverage.
General Liability Insurance
General liability insurance is coverage that every business needs. It can essentially be referred to as general business insurance. General liability insurance helps protect a business from any claims made against it.
This particular business insurance from Lopriore.com may include issues such as causing personal injury or property damage to another individual’s or business’s property.
General liability insurance will also protect you against suits for slander and other intangible threats against your business. General liability insurance is the one type of insurance that every business should have bar none.
Product Liability Insurance
Any business that is involved in the design or manufacture of products should have product liability insurance.
A company should always take utmost care to ensure that their products have no defect whatsoever. However, mistakes do happen, and your business might produce a damaged product. If the product causes a user any harm, then they can sue you, and product liability insurance will be your defense.
The product liability insurance coverage will be customized to suit each specific product that your business makes. It makes it much easier to deal with different lawsuits against multiple products, and especially in cases where your business deals with potentially harmful objects or substances.
Business Interruption Insurance
Many events can affect the operations of your business. These events will lead to a disruption of business and a significant loss of income. Such events may include natural catastrophes, strikes, war, or a pandemic. If you get business interruption insurance, you will be well protected in case such an event occurs.
Business interruption insurance mostly applies to brick and mortar businesses that need a physical location to operate. Receiving the income, you would otherwise have lost might be the difference between your business surviving or dying.
Almost all types of businesses own some sort of motor vehicle. The vehicle may be used for transporting employees, making deliveries, or for many other purposes.
Regardless of the reason for using the vehicle, it should have insurance, which is called vehicle or commercial auto insurance. It will protect your business against any liability should the vehicle be involved in any form of accident.
Vehicle insurance will only cover a vehicle if it has been damaged while conducting business operations. The vehicle insurance should always include third-party insurance, a policy that protects your business should someone else other than your employee be hurt in the car accident. You should customize the vehicle insurance to suit your particular business.
Essentially, every business has an online presence. Unfortunately, being online means that you are at risk of cyber attacks that can be debilitating. If you want to protect your business against any damage that may be caused as a result of cyber attacks, you should have cyber insurance. In some cases, it may be called data breach insurance.
A cyber attack is dangerous not only to the information contained in your computers but also to the computers themselves.
The damage is hence two-fold and can be devastating to your business. Cyber attacks pose some of the most potent threats to businesses. Cyber insurance can offset a great cost that your business would otherwise have to pay.
There are many forms of insurance that businesses can undertake. The type of insurance your business has will depend on the industry in which you operate.
It will also depend on the state insurance laws. If you can get the above insurance policies for your company, you should be well protected. You should feel free to undertake whichever insurance policy you feel works best for your business.