If you are a current business owner or are planning to start up your own business, insurance should be one of the main topics on your mind. Business insurance coverage is designed to protect business owners and independent professionals. It offers coverage against general everyday risks like employee mistakes, damages to inventory or the company premises, and legal fees.
Some business insurance policies can also provide companies with protection from financial loss due to business interruptions or the breakdown of their supply chain. The type of coverage your company needs is based on several factors, including the company size, the industry you are in, and your revenue.
What Does Business Insurance Cover?
Since every business has different needs, there are many kinds of business insurance policies that offer different coverage types. It is essential to find out what is covered by your insurance policy to see if you need to fill in any gaps and ensure your company is fully protected.
Here are some details on the different types of business insurance you should be aware of.
Public Liability Insurance
This coverage helps protect your company if a case against you is brought to court by a client, customer, or member of the general public. If your business is sued, it protects company owners and their assets from losses associated with property loss, damage, injury, and other losses endured by members of the public or any third parties.
Employers’ Liability
Employers’ liability insurance offers protection from financial loss if an employee suffers from an injury or illness that is job-related and one that is not covered by Workers’ Compensation.
Company owners may combine this insurance with Workers’ Compensation to provide additional protection for companies against fees associated with workplace injuries, illnesses, or fatalities. This type of coverage is also commonly known as “Part 2” of a Workers’ Compensation policy.
Product Liability
Product liability offers protection from monetary loss due to the insured’s legal liability due to damage or injury from using a product made by the company. It could also be due to damage or injury caused by a contractor after the services were completed.
Professional Indemnity Insurance
Also known as Professional Liability Insurance or PI, this covers all legal fees and expenses incurred in your company’s defense. It also covers any damages or costs that may be awarded if you are accused of providing inadequate services, designs, or advice that cause your client financial loss. Many businesses have this form of coverage to cover any possible legal fees or compensation payments they may endure following customers’ and clients’ lawsuits.
Business Interruption Insurance
Business interruption insurance protects your company’s loss of income in the event of a sudden temporary closure. It can cover loss due to theft or damage to property from an event such as a fire. It can also help you continue to pay for any expenses owed while your company’s property is repaired.
Business Property Coverage
Business property coverage will protect your company’s building and all personal property inside. That can include your furniture, electronic equipment, inventory, and tools, among other items.
Key-Man Insurance
Key-Man, or key person, insurance is a type of life insurance policy that a business will purchase on one of their key executives’ lives. With this policy, the company is the beneficiary and will take care of all the insurance premiums.
The company receives a payoff in the event of the executive’s death. These funds may be used to help the business pay off debts, distribute funds to their investors, pay severance to employers, or close the business down in a professional manner without facing bankruptcy.
What is not Covered by Business Insurance?
As with any insurance policy, there are some things a business insurance policy will not cover. As a business owner, it is essential to understand what is and is not covered.
Your general policy may not always cover losses due to specific natural disasters caused by the weather for your commercial property. That is also true for property belonging to your customers or clients stored at your place of business.
A standard professional liability policy does not cover intentional or fraudulent acts. However, some bonds can cover theft or fraud. General liability policies for businesses also do not cover auto accidents involving employees driving a company car. For this type of coverage, you would need a commercial auto policy instead.
While most standard business insurance policies will not provide coverage for every area of your business, it is possible to add coverage riders to help take care of any additional risks your company may endure.
How to Choose the Right Amount of Coverage for Your Business
It can be difficult for most business owners to configure exactly how much coverage they need. There is no way to accurately predict the risk involved with operating a company, big or small. But there are some things you can do to help you better estimate how much coverage your business needs.
Take Inventory of Your Company Risks
Take a closer look at your company’s possible liabilities and losses. That can include any property, such as your home, if you run your business from there. It can also include equipment, vehicles, and supplies essential for your business. Also, keep additional risks in mind, such as the death of a key employee or data breaches that could cause financial loss.
Separate Personal from Commercial
It is always essential to keep your personal property separate from your commercial property. It is crucial if your business is new and you are using your car or your home for business needs. Your insurance policies, such as your homeowners’ insurance or auto insurance policy, will not cover damages or losses associated with commercial activities. You will need separate coverage to protect your company’s assets.
Look at Your Premium Reduction Strategies
It is a good idea to find out from your insurance agent if there is anything you can do to lower your premiums. You do not want to cut corners by dropping the coverage you may need. However, if there are discounts available for having multiple policies with the same provider, this could help you save a lot of money on your overall insurance costs.
To learn more about how you can protect your business with insurance, contact Hometown Insurance experts today. Our licensed professionals will be happy to answer any questions you have.
