As a business owner, one of your primary objectives is to protect your business — at all costs.
You need to protect it from the consistent threat of failure; from burglars who might want to make away with your stock, from acts of nature that can rip your premises apart…the list is endless.
The question is: what protection strategies are you putting in place?
If you’re anything like most entrepreneurs, there’s no doubt one of your best strategies is purchasing adequate business insurance. But saying “business insurance” is a broad way to put it.
There are many types of business insurance. You don’t need to purchase every type of insurance policy in the market. You just need the ones that suit your business.
Continue reading for a comprehensive guide to the various types of business insurance.
Table of Contents
Workers’ Compensation Insurance
Here’s the thing. Business insurance costs money.
If you’re just starting out or your business is running on a shoestring budget, you might not see the immediate need to buy the various business insurance policies.
Unfortunately, in some instances, you don’t have a choice. All states require employers with at least three employees to purchase at least a certain amount of workers’ compensation insurance.
This insurance policy protects your business in the event that an employee is injured on the job. Because employees are legally entitled to compensation from their employers when they sustain a workplace injury, this policy ensures you don’t have to dig into your business’ financial pockets. Your coverage provider will process the injured employee’s claim and make compensation payments.
Considering that the average cost of a workers’ compensation claim is $40,000, does your business have this kind of money sitting around? Without workers’ compensation coverage, a single claim from an injured employee can drain your business’ finances.
So, it’s in the best interest of your business to purchase this type of insurance. If you don’t, you’ll be risking regulatory audits and fines.
What’s more, don’t just buy this policy for the legal sake of it. Take measures to increase your workplace safety. Have a go-to facility such as https://www.injuredcalltoday.com/work-accidents/ where your injured employees can receive specialized treatment.
This might seem like a lot, but investing in your employees pays off. A safe and healthy workplace environment improves employee motivation and productivity.
General Liability Insurance
Your employees aren’t the only people who could get injured at your work or business place. Your customers, service providers, and other people who come to your business also risk injury.
For instance, a client can tumble down your stairs and break a bone or sustain any other injury. If the staircase was wet or faulty, they can hold your business liable for their injuries. This means you’ll pay for their medical expenses and other costs.
This is where general liability insurance comes in handy.
With this policy, your carrier will compensate anyone (other than your employees) who can successfully file a claim against your business.
General liability insurance can also protect your business against claims from your landlord. For example, if your business uses rented premises, your landlord can hold you liable for any damages you make on the property. If your business is indeed liable, your general insurance provider will compensate the landlord or fund the necessary repairs.
Product/Professional Liability Insurance
Although some general liability insurance policies cover product liability claims, it’s advisable to purchase a policy that covers product liability outright. This is because product liability claims can quickly evolve into a multi-million class action lawsuit.
Product liability insurance deals with claims arising from injuries or harm caused by your product. Let’s says your business makes and sells generators. Unfortunately, one generator malfunctions due to a design flaw and causes fire in a customer’s home. The fire razes down the property and injures other people.
In this case, the customer has every right to sue your business. Your product was the source of the fire. Such cases typically end up in settlements.
When you have adequate product liability insurance, you don’t have to worry about exposing your business to such risks. The insurance company will settle the claims.
And if your business provides a professional service, what you need is professional liability insurance.
Let’s you’re a physician. You open up a private practice. Unfortunately, you misdiagnose one of your patients. This misdiagnosis leads to the prescription of the wrong drugs, which cause harm to the patient.
Although professional malpractice claims can be hard to prove, you don’t want to count on the chances that the patient’s lawsuit will fail. If it doesn’t, you (and your practice) might have to pay out a lot of money to the patient.
If you don’t want that to happen, purchase professional liability insurance. Your policy carrier will compensate the victims of your professional malpractice.
Property insurance is ideal for businesses that own their premises.
Like homeowners’ insurance, property insurance protects your business from losses that might arise from the physical damage of your premises.
Assume a severe storm hits your areas and rips off the roof of your business’ building. Or, worse, rips off the entire building. Suddenly, your business has no home. Your furniture, appliances, and even stock are no more.
Without property insurance, your business is staring at deep losses. You’ll need to rebuild the structure, buy new furniture and appliances, and restock.
Do you have the money to pull this off?
Like most small businesses, you won’t have a way back – unless you had sufficient property coverage. With this insurance policy, your provider will compensate you for your losses. From the money you’ll obtain from your claim, you’ll be able to finance most of your rebuilding or recovery operations.
Business Interruption Insurance
When starting a business, the last thing on your mind is an interruption. However, business interruptions are very common.
A common source of interruption is natural disasters. A wind storm, floods, or anything else that can damage your commercial building will cause some interruption. If your property gets damaged, you’ll have to close down until you make repairs.
Closing down your business means losing revenues. If your business heavily depends on sales revenue to fund its day to day operations, you might be in a major problem – unless you’ve got business interruption insurance.
This type of insurance covers any incident that will cause your business to lose its income. When you have this policy, you can rest assured that your days of business interruption won’t go to waste. Your provider will compensate you accordingly.
Business Vehicle Insurance
You don’t have to run a courier to own business vehicles. Even a small retail business can buy business vehicles for various uses.
If you have automobiles registered under your business name, then you need business vehicle insurance. This policy protects your business against loses or claims that might arise when your business vehicle is involved in an accident.
For example, let’s say one of your employees was out on business duty with a company vehicle. Unfortunately, they’re involved in an accident. Your company car is written off and to make matters worse, your employee is at-fault for the accident. The other party is suing for compensation.
With commercial auto insurance, your business will be in deep trouble. First, you’ll lose the company car that’s been damaged beyond repair. Second, your business will have to compensate the other party for their injuries and losses.
This is why you need business vehicle insurance.
Although specific terms and conditions for this policy vary from provider to provider, a comprehensive cover will give your business maximum protection. This means you’ll receive monetary compensation for any losses your business incurs from the use of company vehicles. The policy also compensates other parties for your liabilities.
Did you know 43 percent of cyberattacks target small businesses? Or that 60 percent of the small businesses that suffer a cyber attack go out of business within six months?
Clearly, cyberattacks are a huge problem for small businesses.
While there are measures you can take, such as hiring an in-house IT security specialist, to make your business less vulnerable to these attacks, attacks can still happen. And when they do, your business’ operations could be crippled for hours, days, or even forever. What’s more, your customers can sue you, particularly if the attack resulted in a loss of private customer data.
With cyber insurance, the damage caused by a cyberattack won’t be as extensive. Your policy provider will compensate you for any losses or liabilities resulting from the incident.
Types of Business Insurance: It’s Time to Buy
These types of business insurance will protect your business from financial losses and liabilities. As a business owner, it’s your job to identify the coverage needs of your business and find the best business insurance carriers. Don’t wait until the worst happens to purchase insurance.
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