As an entrepreneur, you put your heart and soul into making your business a success. So, ensuring your business is protected against the unexpected makes sense. That's where business insurance comes in. This article will help you understand the different kinds of insurance you can purchase and how they can help you mitigate risks.
Insurance is a Key Part of Securing Your Business
Insurance protects your business, its property, employees, clients, and customers against damages that you may be held responsible for. Without insurance, an accident or lawsuit could have a devastating impact on your business, from which it may never recover.
Holding insurance also signals to your employees, clients, customers, and partners that you have their best interests in mind. State law or client contracts may require that you carry certain types of insurance.
There are several different policy types offered that are customizable to meet the needs of your business.
Seven Main Types of Insurance
General Liability Insurance
General Liability, or business liability Insurance, covers you from certain types of claims arising out of your everyday business operations, such as an employee breaking a window at a client's property or damages caused by your products or services. It's important that you understand the risks to your business and what your insurance policy covers to ensure you have the coverage you need.
Business Owners Policy
A Business Owners Policy is a popular insurance choice for small and medium-sized businesses, which combines general liability and commercial property insurance into a single policy. It provides coverage for your business property, such as buildings, equipment, and goods, and your liability toward third parties and their property from accidents and lawsuits. Tailored options can also cover loss of income from covered losses or provide coverage for advertising or product injury.
Professional Liability Insurance
Professional Liability Insurance, sometimes called Errors and Omissions insurance, protects against the unique risks that business professionals such as lawyers, consultants, accountants, and architects face due to the services they provide. Mistakes can cause their clients to suffer financial losses, for which they can ultimately be held liable. These mistakes could include errors in accounting or flaws in architectural designs that do not meet local or federal standards. General Liability coverage does not cover these claims.
Commercial Auto Insurance
Commercial Auto Insurance is a liability and physical damage protection for vehicles used for business. Vehicles can include cars, trucks, or vans. For example, suppose your business uses a vehicle to perform services, make deliveries, run errands, or transport clients. In that case, you might need a commercial auto policy to protect you from accidents, damages, or theft.
Commercial vehicles require a separate policy because they have exposure to more risk than personal vehicles or other business property.
Workers' Compensation Insurance
Workers' Compensation Insurance, also called Workers' Comp, protects your employees if they become injured or ill while working for you. Workers' compensation insurance protects your business from lawsuits your employees could file against you if they get injured.
Workers' Compensation covers an employee's losses due to work-related injury or illness. This coverage includes medical payments, a portion of lost wages, rehabilitation, vocational retraining, and death benefits. The injury must have occurred during work for an employee's injury or illness to be covered.
Cyber Insurance protects your business against damages or liabilities caused by electronic threats to your computer systems or data. Cyber threats can lead to theft of data, damage to your systems, and costly delays or shutdowns to your work. Cyber threats can also expose your business to liability if sensitive client data is stolen or misused. A cyber insurance policy can cover costs that arise from electronic threats.
Commercial Property Insurance
Commercial Property Insurance provides coverage for commercial buildings, equipment, and other movable property owned by and used for your business. It can protect you from losses or damage to your property due to theft, fire, catastrophe, natural disaster, or vandalism. You can purchase this as part of a Business Owners Policy, but you can also buy it separately.
For more information on the different business insurance policies available and other tips on protecting your business, download our free Guide.