Types of Business Insurance
There is no telling what happens in the future. While insurance may not appear as an immediate need for a business, nobody knows when one might need it to cover the cost of loss, liability or damage.
What insurance does one need for a business? Find this out from our basic guide to business insurance.
Benefits of Having an Insurance
While insurance policies to cover business assets are not mandatory and while it may not appear as a high-priority expense, in the long run, businesses could benefit from having insurances to:
- Protect itself from lawsuits arising from possible malpractice, mismanagement, wrongful termination claims, breach of contract or defamation of another party;
- Help cover medical expenses of employees who were injured while at work or who got sick in the course of his employment or of people who were physically injured while in the owner’s business premises; or
- Get compensation for the loss of business property from theft or fire or flood or other calamity.
Insurance Against Property Damage/Loss
The most common or general insurance policies for businesses are property insurance and liability insurance. Property insurance insures the business location and all that it contains (fixtures and furniture, equipment, machinery, inventory and supplies) from loss or damage. This includes properties owned by others but contained in the insured business’ location at the time of loss or damage. Property insurance could be basic or specific to certain calamities like fire, flood, or explosion. If a business is insured only against fire, for example, any damage caused by another disaster will be excluded from compensation from a fire-specific policy.
Insurance Against Liability
Liability insurance insures the business against negligence committed by the business or by its employees. The most common example of a situation when it is best that a business has liability insurance is when someone – a client, a supplier, visitor – slips, falls and injures himself in the business’ premises. This is covered under general liability insurance. For injuries or health damage directly caused by a business owner’s product, there is a product liability insurance.
Property and liability insurance policies are optional. But there’s another one that is required by state laws: the worker’s compensation insurance. This insurance ensures that employees who were injured while on the job can immediately obtain payment from the business for medical expenses incurred due to the work-related accident. Whether this insurance is provided by private entities or by state agencies depend on which state the business is registered.
Other Business Insurance
Other insurance policies are for: health and medical, which often factors in a business’ potential to retain the best workers; commercial auto coverage, which pays for damage to business vehicle when involved in an accident or to property damaged by such vehicle; disability coverage, which ensures that a worker who can no longer work due to an injury suffered while at work will continue to receive a portion of his salary; and business interruption insurance, which insures against loss or damage to the ability of the business to make profit.
Insurance costs money, and so it is best that a business be insured just enough for its needs. Consult a business insurance expert to make sure you are not under or over insured.
Other resources to see: Independent Insurance Agents and Brokers of America and National Association of Professional Insurance Agents.
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