5 Types of Business Insurance and Why You Need Them
Regardless of the size or nature of your business, one thing that remains unchanged is the need for corporate insurance. There are many different aspects of your business that you would like to consider when looking for new business insurance or when reviewing your current insurance coverage.
Since each company is different, each will have different insurance requirements. For example, a company that produces physical goods may need different insurance than a company that offers services. In both scenarios, there are some similarities, and here are some types of insurance that all companies should consider.
Worker compensation insurance – for your employees
Worker insurance is mandatory by law in almost all states. It can provide coverage for medical bills and part of the wages lost for an employee who is injured or ill while working. Typically, this type of insurance only covers accidents or illnesses that occur in the workplace, for example, if an employee slips and falls on a wet floor.
Since worker composition laws may differ depending on where your company is located, it’s important to work with an insurance professional to make sure you get the coverage you need, as well as what you need for your particular business.
General liability insurance
General liability insurance is designed to protect you and your company from a variety of complaints, including accidents, injuries or negligence claims. This type of insurance can help pay for things like property damage, medical bills, defamation, slander, legal fees and defective products. Nobody expects to be sued, but the reality is that it is always a possibility. You don’t want to leave your business open to this type of situation and the wider the protection, the better.
Professional liability insurance – “Mistakes and omissions” coverage
Professional liability insurance may also be known as “error and omission insurance” or “negligence insurance”. It protects you from lawsuits involving negligence in providing professional services, providing poor work or making mistakes or omissions. This type of insurance is especially important if you have a service-based business, but it may also be necessary for other types of business. Mistakes occur: Adequate professional liability insurance can be helpful, even if you don’t think you need it.
The definition of “property” is broad and can mean different things for different types of businesses. That is why it is important to ensure that you have adequate commercial property insurance. Without this type of insurance, most small businesses would not be able to replace their equipment if something were to cause damage or destruction.
The properties covered by this type of insurance can include buildings, computers, inventory, supplies and equipment. There are two types of property insurance: “all-risk” policies cover almost everything and is a good way to avoid duplication or overlap of coverage, as well as gaps in trying to cover your liabilities. “Danger specific” or “named hazard” coverage applies only to particular hazards that are specifically stated in the policy. They are usually needed when there is a high risk in a very particular area.
Life Insurance / Key Executive Insurance – Protection and Indemnity
Offering life insurance for employees can be a valuable advantage when trying to attract high-quality employees. A company may even offer additional coverage for executives. These employees are considered crucial to the management and success of the company and may sometimes require additional insurance, beyond what normal employee benefits offer. This can be another advantage in attracting the best talent.
A company may also offer special “Key Person” policies for employees without whom the company would not be able to 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 revenue and the costs necessary to find and train a suitable replacement. The company pays premiums and insurance is considered an economic activity.
It is possible to combine some of these basic coverages as a package policy, often referred to as an owner policy or BOP. Many insurance companies group certain covers together and this can save you money as long as you make sure you get the right type of coverage.
Even if you believe you have adequate corporate insurance coverage that meets all your current needs, it is still advisable to review all coverage on an annual basis, to make sure that the coverage continues to provide everything you need. This is especially important if you or your company has experienced major changes, such as changes in family status or a significant increase or decrease in business activity. Also, make sure you work with a reputable insurance agent or broker who has knowledge of business like yours.