From the day you started your business, you exposed it to certain risks, some of which cannot be avoided. Even if your business is just a startup without employees, it’s at risk of lawsuits and other catastrophic events. Having the right business insurance policies in place is one of the most crucial things for a business.
There are many types of commercial insurance policies. Given that all businesses are different, you need to get policies that reflect the needs of your specific industry. There are primary insurance coverages that all businesses must have, but the rest highly depend on the set of risks a business is likely to face.
To make shopping for insurance easy for you, we’ll help you understand some of the different types of commercial insurance and help you make an informed decision.
General Liability Insurance
There may be many types of business insurance, but we’ll start with one of the mandatory policies. General liability insurance is essential for any business, even if it’s home-based. This policy can help protect your business from general liability claims.
If a third party decides to sue you for injuries or damages sustained in your business, the policy provides legal fees and settlement. There are several types of liability insurance, some of which are not automatically covered under general liability. They include:
- Employment practices liability insurance
- Directors and officers liability insurance
- Business identity theft
- Errors and omissions insurance
Worker’s Compensation Insurance
If your business has employees, then a worker’s compensation insurance is mandatory as well. It can save your business in terms of medical care and partial wages for injured employees. It is also required by the Department of Labor. If an employee were to succumb to injuries sustained in your business, the policy would compensate the family.
Property insurance is highly essential when you own property. It protects you from theft, fire, smoke damage, among others. The coverage depends on the plan you choose and what you need coverage from. If you have business personal property such as office furniture, equipment, inventory, technology, or tools, then this type of commercial insurance policy is vital.
Business Owner’s Insurance
BOP or a business owner’s policy may come as a bundle and include most of the coverage your business needs. It may consist of liability insurance, business interruption insurance, business equipment insurance, property insurance, and even crime insurance.
You can alter your BOP depending on your specific needs, and it would save you a lot. This is because it costs less compared to having all these insurance policies individually.
Commercial Auto Insurance
If you operate vehicles in your business, you undoubtedly need commercial auto insurance. It’ll protect the vehicles that transport your products, equipment, or employees. Your vans, trucks, SUVs, or cars can be protected from collisions or other damages.
If you happen to have employees that use their own cars on business errands, you need a non-owned auto insurance policy that can protect those vehicles. You may find it possible to add non-owner vehicle insurance to your BOP.
Professional Liability Insurance
Also known as the Errors and Omissions Insurance, this policy is not covered in the general liability insurance. It’s crucial that you understand this because it can protect you if you render your professional services improperly or fail to do so at all. This policy is mostly applicable to professional firms such as consultants, lawyers, real estate agents, accountants, among others.
Data Breach Insurance
With the advancement of technology, some businesses store sensitive data about clients and employees on servers. Some still store information on paper files. Regardless, that information must be protected. In case of a security breach, a data breach commercial insurance policy can protect your business against the loss.
Directors and Officers Insurance
This commercial insurance policy can protect your directors and officers against actions that affect the operations and profitability of the business. For instance, if a director in your business finds themselves in a legal situation due to an action they took on the job, the policy can cover damages and costs incurred due to the lawsuit.
Product Insurance Policy
Businesses that manufacture products need to have a product insurance policy for protection. Regardless of how well you take care of your products, you never know what your future holds. You may face a lawsuit due to the damages the products cause. Your coverage may be customized to the specific products your business deals with.
Business Interruption Insurance
If a disaster or catastrophe were to strike your business, the operations would be interrupted or come to a halt. By the time you make repairs, renovations, and replacements, your business will suffer immense losses. This may include income loss due to the inability to conduct business.
A business interruption insurance is one of the most important types of commercial insurance policies, especially if you highly depend on a physical location to conduct business.
In the event of a large claim, a potential payout and legal fees could exceed your general liability or business auto policies, among others. An umbrella policy can provide an additional level of liability protection over and above your underlying scheduled policies. The higher the liability coverage you carry, the more protection you have from the insurance company.
Key Employee Insurance
Most businesses have a key employee that outshines the rest, and in their absence, the business may suffer losses. If something were to happen to your key employee, such as injury or death, this insurance policy would help you lessen the impact of their absence as you adjust or try to replace them.
Other Types of Commercial Insurance Policies
There are several other types of commercial insurance that you may choose if they apply to your type of business. These include:
This policy will protect your business from damages resulting from terrorist attacks.
Underground Storage Tanks
These storage tanks can pose a risk, especially if you store hazardous substances that may leak. It may save you thousands of dollars if the leak was to damage other properties and harm the environment. Cleanup and liability costs could amount to a high figure.
Employment Practices Liability
There are many types of liability insurance policies, and this one can protect you against employee claims. If an employee were to sue you for wrongful termination, or any form of discrimination, the policy would protect you.
There You Have It!
Now that you have a better understanding of many of the different types of commercial insurance, you are in a better position to choose. The right business insurance policy can save you a lot. If you’d like to know more about picking the right commercial insurance, kindly get in touch with us.