Risks are inevitable in any business. To handle unforeseen circumstances and mitigate your losses, you need to secure appropriate insurance for your business. It’s also a good idea to carry out a risk management audit of your business to identify potential liabilities and accident costs before choosing insurance. This helps you choose the most suitable type of insurance for business risk mitigation.
Changes in the business environment may demand additional insurance, hence the need to review your insurance coverage as often as possible. If necessary, it is best to consult with an expert insurance broker to get the appropriate coverage.
Here are the six types of insurance for business owners:
1. General Liability Insurance
This is one of the most basic types of insurance for business owners, be it home-based or otherwise. It protects your company from liability claims. It caters to any losses or damages incurred in the event an employee, product or service is alleged to have caused bodily harm, property damage or other types of injury to a third party.
For example, if a customer happens to slip and fall in your shop or an employee damages a client’s property while working, general liability insurance comes in to take care of any legal costs and settlement payments to the injured party.
However, the extent to which your business is covered by the insurance varies across regions. In most cases, the amount you are required to pay to settle a lawsuit against your company is more than the maximum amount stated in the insurance policy. You may need to seek out other plans to cover the extra costs.
2. Property Insurance
Whether you own the premises your business is located in, have rented a personal space for your business, or possess property such as office equipment, inventory or computers, business property insurance coverage is a must-have. This insurance protects you in case of a fire, smoke damage or vandalism.
Property insurance covers the costs needed to repair or rebuild damaged physical structures. This type of insurance for business owners doesn’t necessarily include other properties, such as vehicles.
While acquiring business property insurance, ask for the business interruption/loss of earning coverage as part of the insurance policy. This ensures your business profits remain intact even when the business is unable to run normally due to an unexpected turn of events.
Replacing damaged property can easily overwhelm a company and negatively impact its other operations. It’s, therefore, critical that you acquire this type of insurance as soon as possible.
3. Commercial Auto Insurance
This policy covers your company vehicles from damage and collisions in case of an accident, including those used by delivery personnel. It also covers a third party from bodily injury arising from the accident.
Commercial auto insurance protects your company should an employee use their car to run company errands too. Always declare non-owned auto liability to protect the company from losses in a case where an employee has little or no insurance coverage.
Also, make sure the commercial auto insurance policy includes all vehicles used in your business operations. Based on your needs, you can also modify the plan such that it replaces a car that was involved in an accident.
4. Business Owner’s Policy
This policy brings under one roof all of the insurance that a business owner needs. Among these are general liability insurance, property insurance, business interruption insurance, vehicle insurance and crime insurance.
This insurance package can be altered to include insurance policies that are most relevant to your business. The business owner’s insurance policy is preferred by most entrepreneurs since it’s aggregately cheaper than acquiring individual insurance covers.
5. Workers’ Compensation Insurance
The workers’ compensation insurance policy has to do with all things employee welfare. It covers medical treatment and disability costs. It also provides death benefits should an employee lose their life while on the job.
This type of insurance for business owners covers wage replacement and provides medical benefits to an employee who is injured while working. Irrespective of who was in the wrong, the employee gives up their right to sue the employer should such an incident happen.
Having a workers’ compensation insurance policy could save an employer lots of money and time. This is also a statutory requirement for business owners in most countries. Failure to secure this coverage may attract severe penalties.
6. Professional Liability Insurance
This policy is also referred to as errors and omissions insurance. It provides protection against damages due to improper delivery of professional services. As such, it is especially significant when handling professional negligence claims or other scenarios that might point to the failure of a business to perform.
The policy addresses specific industries and areas of work. Unlike the general liability policy, professional liability insurance is only relevant among professionals such as lawyers, real estate agents, insurance agents, technicians, and accountants, among others. If you’re involved in direct interaction with customers while offering services or advice, professional liability insurance is an essential insurance for business owners.
Every business has unique practices that define how they carry out operations. In the course of operations, a company is exposed to risks which, if left unmitigated, could grind those operations to a halt. It’s essential to understand the kind of risks your business is likely to face and take out insurance policies that mitigate those risks.