From the day an entrepreneur starts a business, he exposes himself to certain risks. Owning a business can be difficult. A lot goes into it. As such, businesses need to be insured to have adequate protection, especially in unforeseen circumstances that may heavily impact their finances and operations.
What kind of insurance do you need? What are the different types of business insurance, and why are they important? We’ll answer those questions in this article. Here are some insurance types that a business must have in place as soon as you start.
Professional Liability Insurance
Professional liability insurance, also known as errors and omissions (E&O) insurance, protect your company should anything happen to a client or other third-party because of your products or policies.
Of all the different types of business insurance, one of the most essential is business liability insurance. Business liability insurance is one that needs to be customized according to your business field. This is because every industry has a different set of standards.
You may wonder why you need this, especially since you don’t intend to hurt anyone. Sometimes, you don’t have to. Incompetence and even product mistakes can happen at any level by your staff and always have consequences.
Whether a business owns or leases its space, property insurance is a must. This insurance covers equipment, signage, inventory, and furniture in a fire, storm, or theft event. However, mass-destruction events like floods and earthquakes are generally not covered under standard property insurance policies. If your area is prone to these issues, check with your insurer to price a separate policy.
Property insurance is imperative for brick and mortar businesses because this covers equipment damage, signage, inventory, and even furniture in the event of fire, storm, or even burglary and theft. However, property insurance rarely covers these if the cause is due to floods or earthquakes, deemed major destruction.
If you own your building or have business personal property, including office equipment, computers, inventory, or tools, you should consider purchasing a policy that will protect you if you have a fire, vandalism, theft, smoke damage, etc. You may also want to consider business interruption/loss of earning insurance as part of the policy to protect your earnings if the business is unable to operate.
Workers’ compensation insurance.
While every business owner wants to keep their employees safe, it isn’t always possible. Delivery drivers can still get in accidents even if they’re doing everything right.
Once the first employee has been hired, workers’ compensation insurance should be added to a business’s insurance policy. This will cover medical treatment, disability, and death benefits if an employee is injured or dies as a result of his work with that business. Even if employees perform seemingly low-risk work, slip-and-fall injuries or medical conditions such as carpal tunnel syndrome could result in a pricey claim.
This type of insurance is for employees who are injured on the job. This type of insurance provides wage replacement and medical benefits to those who are injured while working. In exchange for these benefits, the employee gives up his rights to sue his employer for the incident. As a business owner, it is essential to have worker’s compensation insurance because it protects you and your company from legal complications.
Your workers’ compensation insurance needs to be added to your overall business insurance policy as soon as your employees are hired. This insurance policy covers medical treatments, disability, and death benefits if your employee is injured, or worse, passes on, as a result of his work on your business. In these scenarios, you are ensured that your business has ample coverage to support your employees.
Home-based businesses Insurance
Many professionals begin their small businesses in their own homes. Unfortunately, homeowner’s policies don’t cover home-based businesses in the way commercial property insurance does. If you’re operating your business out of your home, ask your insurer for additional insurance to cover your equipment and inventory in the event of a problem.
This type of insurance can protect against damage to the home and damage to items inside the home. Additionally, this type of insurance may protect you from accidents that happen at home or may have occurred due to your own actions.
5. Product liability insurance
If your business manufactures products for sale on the general market, product liability insurance is a must. Even after taking all the necessary measures possible to ensure your products are safe, there are unfortunate scenarios wherein products fail the quality standards and end up reaching the end-users. In this case, the customer may file a claim against the business product liability insurance protects you if your product harms someone or damages their property.
This case can ruin a small business, even if your product was not responsible for the damage. That’s because the legal fees in these cases can mount, and you may have to pay them even if you win.
6. Business Vehicle insurance.
If your businesses use any company vehicle, ensuring it is an absolute must. Business vehicle insurance protects the company in case of a crash. This insurance has a dual function, protecting against both physical damage and bodily injury resulting from a crash, and also any liability that might arise from the collision
This type of insurance is mandatory for businesses with company vehicles for business transactions such as logistics, transport, and delivery.
7. Business interruption insurance.
Business interruption insurance helps to cover your business from a natural disaster, which can wreak havoc on a business, and you may even have to repair or rebuild your store. During this time, your business will suffer from lost income due to your staff’s inability to work in the office, manufacture products, or make sales calls. . Business interruption insurance helps cover some expenses until you can get your business running again.
This type of insurance is especially applicable to companies that require a physical location to do business, such as retail stores/malls. The bad news is that it doesn’t always cover everything, and many businesses go under insurance.