What Is Business Insurance?
Business insurance can refer to a broad range of insurance plans and policy options designed to protect businesses and business owners from financial loss. Due to varying differences that each company, every business must tailor their insurance plans to cater to their individual needs.
Why Do I Need Business Insurance?
Even if you don’t think that your business has enough assets to be worth suing, and you’ve already incorporated the business (hopefully relieving yourself of personal liabilities), it’s still a good idea to purchase business insurance. Here’s why: essentially anyone can be sued these days. Further, the courts have established precedent to make damages payable through wage garnishments, bank account seizures, or liquidation. Due to these risks, your business should always consider purchasing a tailored policy to cover all of its potential needs.
What Type(s) Of Insurance Does My Business Need?
General liability insurance – Every business needs to have liability insurance. This insurance protects you and provides damages for most bodily injury or property damage your business (or any extension of your business – like an employee) does do a third party.
Product Liability Insurance – If your company manufactures or sells a physical product, then it would be a good idea to get product liability insurance. Product liability insurance protects you in the cases where your product is defective and causes injury or damage.
Professional Liability Insurance – Also known as Errors and Omissions Insurance, these policies provide damages for failing to render professional services (general liability policies do not provide this protection). This is suggested for any professional firm including: lawyers, accountants, consultants, real estate agents, notaries, and many more.
Property Insurance – If you own a building or any personal property used in your business (I.e. office equipment, computers, inventory, or any tools), then it’s a good idea to consider buying property insurance. This type of insurance will protect you against any fire, vandalism, theft, etc. that may effect your business’ property. This policy can also include loss of projected earnings if any catastrophic event occurs.
Commercial Auto Insurance – A commercial auto insurance plan protects you from any damages caused through any vehicles that carry employees, product, or equipment. If you do not have company-provided vehicles and your employees take their own vehicles to work, you should consider purchasing non-owned auto liability to protect the company in case the employee does not have insurance (many times this can be added to a BOP policy).
Worker’s Compensation – Worker’s compensation is insurance for when employees are injured on the job. This insurance offers wage replacement as well as medical benefits for those who are injured while working. This insurance also protects the employer against any lawsuits due to an incident where an employee gets injured. State laws differ, but many states require you to have worker’s compensation if you have W2 employees staffed.
Homeowner’s Insurance – This insurance protects you against damages to your home and against damages to items inside your home. This type of insurance may be able to protect you from accidents that happen at home and is suggested for smaller companies still operating out of residencies.
Can I Just Buy A Bundle That Covers All of My Needs?
Of course, there is an easier alternative if you don’t want to be juggling several policies all at once. Known as a Business Owner’s Policy (BOP), BOP’s are theoretically supposed to protect small business owners from most damages that they could incur through their tenure. Essentially, a BOP is a packaged policy that includes various types of insurance (i.e. vehicle coverage, liability insurance, crime insurance, etc.) to make the plans more manageable for employers. These plans differ greatly, so make sure you discuss all possible options (and disasters) with an advisor before selecting one.
So I Need To Buy Insurance, What Do I Do?
In order to buy business insurance, you will want to hire an insurance professional (i.e. a broker for larger companies, or an agent for smaller businesses). Make sure to choose this person carefully (ask for recommendations from your local chamber of commerce), as picking out the right insurance can make-or-break your company if catastrophe hits. Choose someone that is licensed and doesn’t have a history of administrative discipline procedures. Most importantly, be sure that this person has a complete grasp over all aspects of what your business does.
What Should I Bring To The First Meeting With My Insurance Broker/Agent?
The most important thing that you can prepare for your first meeting with an insurance professional is to clearly list ALL of the practices that your business performs (as well as what it does not do). This list should include: manufacturing, deliveries, billing of clients, ANYTHING that involves you, your employees, or your business. Having a clear and concise list of all business operations allows for your insurance professional to make the best decision regarding which policy you should purchase.
If you found this interesting, check out our article on Employement Law.