5 types of business insurance and why you need it

No matter the size or nature of your business, one thing that remains the same is the need for business insurance. There are many different aspects of your business that you’ll want to consider when shopping for new business insurance or reviewing your current insurance coverage. Since every business is different, each will have different insurance requirements. For example, a business that produces physical goods may need different insurance than a business that provides services. In either scenario, there are some similarities, and here are some types of insurance that all businesses should consider.

Workers Compensation Insurance – for your employees

Workers’ Compensation insurance is required by law in almost all states. It can provide coverage for medical costs and a portion of lost wages for an employee who is injured or becomes ill on the job. Typically, this type of insurance only covers injuries or illnesses that occur in the workplace, such as if an employee slips and falls on a wet floor.

Since laws related to workers’ compensation may be different depending on the location of your business, it’s important to work with an insurance professional to ensure you get the required coverage as well as what you need for your particular business.

General liability insurance

General liability insurance is designed to protect you and your business from a variety of claims, including accidents, injuries, or negligence claims. This type of insurance can help pay for things like property damage, medical bills, defamation, slander, legal costs, and defective products. Nobody expects to be sued, but the reality is that the possibility always exists. You don’t want to leave your business open to these kinds of situations, and the broader the protection, the better.

Professional Liability Insurance – “Errors and Omissions” Coverage

Professional liability insurance is also known as “errors and omissions insurance” or “malpractice insurance.” It protects you from claims alleviating negligence in rendering professional services, rendering shoddy work, or committing errors or omissions. This type of insurance is particularly important if you have a service-based business, but may be necessary for other types of businesses as well. Mistakes happen, so proper professional liability insurance can come in handy, even if you don’t think you’ll need it.

property insurance

The definition of “property” is broad and can mean different things to different types of businesses. That’s why it’s important to make sure you have adequate business property insurance. Without this type of insurance, most small businesses would not be able to replace their equipment in the event something were to happen and cause damage or destruction. Property covered by this type of insurance may include buildings, computers, inventory, supplies, and equipment. There are two types of homeowners insurance: “all risks” policies cover almost everything and are a good way to avoid duplication or overlapping coverage, as well as gaps when trying to cover your liabilities. “Specified peril” policies or “named peril” coverage apply only to particular perils that are specifically mentioned in the policy. They are usually necessary when there is a high risk in a very particular area.

Life Insurance / Key Executive Insurance – protection and benefit

Offering employee life insurance can be a valuable benefit when it comes to attracting high-quality employees. A company may even offer additional coverage for executives. These employees are considered critical to the operation and success of the business and may at times require additional insurance, beyond what is provided by normal employee benefits. This can be another benefit to attracting top talent.

A business may also offer special “key person” policies for employees without whom the business could not function. Key person insurance protects against the unexpected death of a key employee; often the amount of the benefit is equal to the expected loss of income and the costs necessary to find and train a suitable replacement. The business pays the premiums and the insurance is considered a business asset.

It’s possible to combine some of these basic coverages as a package policy, often called a business owner’s policy, or BOP. Many insurance companies bundle certain coverages together, and this can save you money, as long as you make sure you get the right type of coverage.

Even if you think you have adequate business insurance coverage that meets all of your current needs, it’s a good idea to review all of your coverage annually to make sure your coverage continues to provide everything you need. This is particularly important if you or your company have experienced major changes, such as a change in family status or a significant increase or decrease in business activity. Also, be sure to work with a reputable, licensed insurance agent or broker who is knowledgeable about businesses like yours.

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