Businesses need to protect themselves against financial losses, risks, and damages. There are a number of insurance products catering to every business owner’s need for protection. For one, the state where your business is incorporated will dictate the business insurance policies you need to buy. Your state may require further coverage per your operations. Your lender too can ask you to buy certain insurance products to protect the assets securing your business loan.
Types of Business Insurance
A. Business owner’s policy (BOP). A bundle of coverage that protects a business owner from property damage, business interruption, and general liability. You can customize this BOP to suit your needs but this bundled insurance package usually does not include coverage for company-owned vehicles, workers’ compensation, and D&O, which will require separate policies.
B. General liability policy. This protects you from damages arising from bodily injury or property damage allegedly caused by your business, employees, or products/services to a third party. Your general liability policy will cover the costs of defense against such claims.
C. Property policy. This protects your business’s personal property such as machinery, equipment, and inventory against fire, theft and other risks. Indeed, the term property has a broad definition that policies of this type come in two types: (a) protection from a wide range of risks and perils, and (b) protection against risks specifically set forth in the policy.
To protect the sensitive and proprietary information stored in computers and paper files, a data breach policy is recommended.
D. Commercial auto insurance. If your company owns trucks, SUVs, and cars used in business, you will need a commercial auto insurance.
For vehicles that are not company-owned but are owned by employees and used for business transactions, take out a non-owned auto liability insurance. This will protect your company if such leased or non-owned vehicles caused accidents.
E. Worker’s compensation. This is a form of insurance providing employees who are injured on the job with medical benefits and wages. If not in place, your company could be sued by the employee for negligence. Your state may or may not require worker’s compensation.
F. Professional liability insurance. If your company provides services, e.g. consulting, accounting and legal, a professional liability insurance or errors and omissions insurance will protect your company from damages arising from claims over malpractice or failure to render professional advice.
G. Product liability insurance. If your business manufactures or sells products, you will be protected by this insurance against losses arising from claims that your product is defective or has caused bodily harm or injury.
H. Directors and officers insurance. If one of your officers and directors faces a lawsuit in connection with his/her duties, the D&O policy will shield the company from monetary costs related to the defense or settlement of the legal action.
I. Homeowner’s insurance. If you have a home-based business, a homeowner’s insurance is imperative. But because it only focuses on the property itself, riders may be added to cover your employees, property and other assets. Or you may have to purchase the above business insurance policies separately.