Business insurance is a necessary part of owning a company. Business insurance reduces risk for the business owner and protects the company against many forms of liability. Though you may not initially know how to choose the right coverage for your business, determining what type of business insurance is greatly determined by the type of business you conduct.
Types of Business Insurance
Generally, there are four types of business insurance, including:
- General Business Liability
- Commercial Auto Insurance
- Workers Compensation
- Business Owners Insurance
General Business Liability
General business liability insurance is the standard business policy that covers the company in case of claims of property damage or bodily injury. The general business liability policy is the central piece of the business insurance policy. Additional coverage may be added to the general business liability policy, but the general business liability policy is the main component of business coverage.
This business policy covers the company in case of negligence claims and claims involving advertising. This liability coverage will cover the cost of attorneys to contest advertising and negligence claims in court. Business liability insurance also protects your company against slander, libel and settlement bonds. However, insurance carriers will cap the amount that will be paid in lawsuits and legal fees. Just make sure that your business carries enough insurance in case the unforeseen happens.
Commercial Auto Insurance
Commercial auto insurance is coverage for companies that utilize vehicles during the course of doing business. Commercial auto insurance provides coverage for one or more company vehicles. Commercial auto insurance provides bodily injury and property damage liability coverage. In addition, comprehensive and collision coverage is provided for the company’s vehicles. For companies that have many vehicles, such as limousine businesses, fleet insurance may be a less costly option.
Workers Compensation
Workers Compensation insurance is required by each state for any business that employs people. Workers Compensation covers employees in case of injury while working on the job. Forty nine states currently require Workers Compensation insurance. Texas is the only state that does not require businesses to carry this insurance for employees. If an employee is injured on the job, Workers Compensation insurance covers them for their medical treatment, lost income and any rehabilitation expenses.
Other Business Coverage
Businesses may purchase additional coverage such as:
- Business Owner Insurance: Business owner insurance combines a general liability policy with business interruption insurance and property insurance. Business interruption insurance covers the business owner if the company loses income and is not able to conduct business for a period of time. When a business owner purchases this coverage, other coverage, such as professional liability, is added as endorsements to the policy.
- Professional Liability Insurance: Professional liability insurance is also known as Errors and Omissions insurance. Professional liability insurance covers service companies just as malpractice insurance covers doctors and health professionals. Many people think of this type of insurance as malpractice insurance for those who are not doctors.
Considerations for Choosing Business Insurance
A few considerations that will help you choose the right business insurance for your company include:
- Meet with an agent. Speak to an agent who specializes in business insurance before purchasing a policy for your company. However, before meeting with an agent, take stock in what your business does and how your company works. You will need to explain in detail what your insurance policy needs to cover when you meet with the agent. An agent who specializes in business insurance will point out areas of coverage that you may have overlooked.
- Once you determine the components of the business policy you need, shop around and obtain quotes from several insurance carriers. Insurance companies charge different rates for similar policies. Shop around to find the best deal for the coverage that your business requires.
- Review your policy each time the policy comes up for renewal to ensure that the coverage you are purchasing covers your business as it grows. When the policy is due for renewal is a good time to add coverage or remove coverage that you no longer need.
How to Choose The Right Business Insurance
Though every business owner would like to get the best price for anything they purchase for the company, choosing the right business insurance should not depend solely on which company provides the cheapest policy. Choose a reputable insurance company as your insurance carrier. You may also want to choose an agent that is close to your place of business. Personalized service is highly valuable in case you need to file a claim.
Why You Need Business Insurance
We live in a litigious society. If for no other reason, this is a good reason why you need business insurance. When you own a business, you will want to protect your business from potential lawsuits, as well as fire, theft and other disasters. Business insurance will make sure your company survives in the event of accidents, slander, liable or any other unforeseen incident.