9 types of business insurance you should have
Insurances exist for the purpose of protecting ourselves, our loved ones, assets, or anything with tangible value. When you insure something, you can recover the monetary losses in the case of casualties.
Business owners give a lot of thought to what types of business insurance to opt for to get maximum coverage and benefits.
Since there are too many business insurance policies out there, it’s a challenging task for them to settle with one. Before we get into business insurance types, what exactly does business insurance mean?
When you run a business, risks and losses associated with it are very common. Sometimes, the risk can hamper your growth and become a potential predator of your business assets. Some examples are natural calamities (like earthquakes or tsunamis), asset or property theft, property damage and defacement, lawsuits, and many more.
But you don’t have to worry about the destruction when you have taken up a company insurance policy. For business continuity after a potential loss, small business insurance policies are a must.
If you cannot calculate whether your business has to be insured, you can work with professionally qualified agents who assist with insurance for small business owners.
So, business insurance is mandatory to recover from collapses and rebuild again. That being the case, what should you know before you start going through insurance policies for businesses.
Know what kind of hazards and jeopardy can possibly harm your business, and what kind of losses it can incur.
Every industry, locality, and business is different and comes with different types of risks.
For instance, if you are in the information technology sector, you will be most likely worried about data security and theft. If you are into food processing, it’s mostly around equipment failure or improper food quality that affects end-users. Understand and evaluate your business risks.
Business insurance policies are entitled to hold clauses and stipulations that can stand in way of receiving your cover check.
The policy documents are usually lengthy and as a business owner, you might not have time to go through them entirely.
However, before signing off, one of the party members must have read and understood the company insurance policy document and clarified any confusion.
Under general business insurance that covers damages to the property, you can cover assets like the building, machinery, special equipment, furniture, and other physical objects within the premises.
Find out if you have any other valuables that are not covered under these general business insurance types.
For example, if you have a patented design or artwork, they need to be protected separately. There are other types of business insurance that protect your business money too.
Insurance agents can help you choose the best plans. Now you have to choose the best-rated insurance provider.
Find out the list of A-rated small business insurance policies and their providers to decide who you want to work with.
More than ratings, check their coverage, terms and conditions, types of business insurance they offer, the application process, required documents, and other similar requirements.
The business owner is the driving force behind everything that happens in a company.
So, along with the business cover, the owner should get personal insurance and accident cover too which can aid during the moments of casualties like sickness and health concerns.
Whether you are a sole proprietor or a partner, ensure that every pillar of the business remains protected and insured.
You deserve to get maximum losses covered to recover without having to incur a loan.
Maximum coverage also denotes maximum premium and extended tenure. Splurge a little extra and be easy on budget limits.
Set aside the maximum amount that you can afford to receive a pretty decent coverage.
Types of business insurance depend on the coverage it includes. They are broadly classified into 9 types.
General liability insurance covers the cost incurred for the losses and casualties for which your business is accountable.
It is your company’s responsibility to take care of the safety of employees and any third party involved in the workplace.
If your employee or contractor gets affected by any calamities like accidents, electrocution, falls, or any mishap within the premises, it’s the company’s responsibility to take care of the hospitalization expenses. If the accident leads to death, the company must provide compensation to the victim’s family.
General liability insurance provides coverage in case of the above incidents. When your company is liable for any personal or property damage caused, general liability insurance helps you meet the expenses without concerning your company funds.
Businesses that work with customers or clients directly (meeting each other in a location) or use third-party’s possessions must take general liability insurance.
BOP is a business insurance bundle that includes liability, property, peril, and business interruption insurance.
Businesses can have add-on packages too for covering forgery, crime, fraud, etc.
BOP is one of the best options in terms of insurance for small business owners as it provides multiple covers at a nominal price lesser than all combined together.
Businesses must meet the eligibility criteria set by the providers to apply and get BOP. The criteria depend on the size of the business, number of employees, location, revenue, and other internal factors.
Hence, not all business owners qualify to apply for the BOP. With BOP, you are eligible to get cover against any property damages, employee or third party contractors, lawsuits, data stealing and breach, copyright infringement, fire, etc.
Professional liability insurance, also known as errors and omissions insurance or professional indemnity insurance, is suitable for consultant firms and professionals like doctors, lawyers, accountants, and architects.
If their customers incur any personal loss or damage after taking up the guidance from these professionals, this insurance can cover the legal and impairment expenses.
If a patient dies due to an error committed by a medical practitioner like prescribing overdosage or misidentifying the disease during the treatment, the hospital or the practitioner needs to pay compensation. Professional liability insurance can cover these expenses.
Professional negligence and errors are inevitable in an establishment, and that can turn out to be more expensive if a lawsuit is filed against them.
Even if the professionals are extremely attentive, getting liability insurance can be handy during such claims.
Whether you have your own office or using a rented building, you will need a property company insurance policy to safeguard your physical office and its belongings, including hoardings and signs.
Physical offices are always vulnerable to burglaries and attacks, accidents, damages by natural disasters, etc.
A business property license is necessary to recover from office damages and rebuild what’s lost.
The insurance amount will be valued based on the worth of the overall property and office appurtenances.
The business owner should maintain the list and value of physical assets before applying for commercial property insurance.
Workman's insurance policies for business are to manage the liability of an employer to pay compensation to their employees on account of their demise.
The death or injury must be an accident that occurred at the workplace or any bodily issues or ailments that the work environment has caused.
This insurance is a must for employees who work in factories, high voltage industries, automotive and locomotive assembles, agricultural, construction, and manufacturing sites, or any job that involves hazardous circumstances.
Given the nature of this insurance, employers who are involved in the above-mentioned enterprises should get workers' compensation insurance.
There are inclusions and exclusions for these business insurance types.
For example, a workplace injury that leads to an impairment or loss of a body part is coverable, while the same happened under the influence of a drug isn’t.
Check with your provider to know where your legal liability stands.
When an employee raises a claim against an employer for unfair labor practices or discrimination on any grounds, this insurance can protect companies against that.
Large corporations usually don’t need this as they have legal teams to take care of the lawsuits and the claims don’t affect them.
Nevertheless, small and medium-sized companies need them, as legal and settlement expenses can be unmanageable.
The coverage of EPLI is applicable for claim reasons like failure to promote an employee, negligent evaluation, biased treatment, violation of employee policies and codes by employers, harassment, invalid termination, and more.
The valuation of the insurance premium will be judged based on previous claims and expenses, and risk factors related to your employee management.
This insurance will cover the legal costs to clear off the lawsuit.
Management liability insurance is for protecting your top officials, managers, and directors from losing their money on claims and complaints made associated related to their job role.
The claim can be from the employees or a third party involved in your company’s operations.
Allegations against upper management, like discrimination, sexual harassment, and biased employee management, are commonly faced by organizations of all sizes.
This insurance protects your company’s management by covering the legal, PR, and settlement costs related to the proclamation.
But this insurance isn’t valid when someone has been intentionally involved in malicious, dishonest, and criminal activities.
Data breach insurance is a must-have for digitally operating companies in this era of technology.
Data breach leads to the loss of data and the overall collapse of the internal IT infrastructure. Such a loss is generally expensive, especially for a small company.
The data breach small business insurance policies can help them manage the expenses related to a data breach activity.
This insurance is of two types: first-party and third-party cyber liability insurance.
First-party liability insurance covers the expenses of a breach that happened in your own network.
The third-party liability insurance works when your client complaints about your network for a security compromise.
Both insurances aim in covering legal fees, settlement costs, and inquiry and crisis management team setup expenses.
Sometimes the coverage amount provided won’t be enough to cover the liability costs.
Commercial umbrella insurance gives you hand to cover the extra outlay when your expenses cross the policy limit.
One such commonly covered insurance is general liability insurance. Yet it doesn’t cover property damage expenses.
Here is how it works. If you have taken up commercial insurance and need more funds for a better healthcare facility for an injured employee, the commercial umbrella insurance can help you meet that.
But this is applicable only when you have general liability insurance in the active stage.
You can even get this insurance from a different provider than the original one.
Business expenses often come around at unexpected times. But certain expenses are too huge for your budget to have any place for them.
An insurance policy for business can bridge this gap and make you run again normally.
Understanding your business essence, risks, operations, gaps, and the entire work environment can support you pick the business insurance types you need.