Running a business comes with a certain level of risk. There are many unforeseen situations and circumstances that are bound to affect the normal operations of your business. That is the reason why you cannot afford to operate a business without insurance.
Sometimes you might be tempted to think that avoiding insurance will save you money in terms of premiums. But the truth is that insurance is one of the best ways to protect your business from financial losses.
However, it is important to ensure that you purchase the right type of insurance from genuine and accredited insurance companies. Before choosing insurance for your business, conduct a risk-management to determine potential accident costs and liabilities.
Here are the common types of insurance that every business owner should have:
Workers’ compensation
Workers’ compensation insurance is meant to offer employees compensation in case they are injured at work. For example, if an employee is injured and he or she is unable to work because of the injury, the insurance company will pay a certain percentage as salary every month until recovery.
The insurance company will also cater for the medical bills as well as any expenses associated with the injury. In exchange for the benefits, the rights of the employee to sue the employer will be waived irrespective of the extent of the injury.
This insurance cover is important because it protects your employees by providing medical cover in case they are injured at work. It also offers you legal protection in the sense that an injured worker will not be able to sue your business.
Property insurance
Property insurance is a must whether you are renting or using your own premises for business. This type of insurance is designed to cater to the cost of rebuilding or repairing the physical structure of your business in case it is damaged by fire, theft, hail, vandalism, or any other risk factor listed in the policy document.
Property insurance may sometimes include business interruption – where your business will be reimbursed for losses related to property damage.
For example, if a fire damages your auto repair business and most of the bays cannot be used, the property insurance with a business interruption clause will provide funds to rebuild the bays and pay for the income lost.
The cost of repairing or replacing property after a fire, theft, or vandalism can severely affect the financial state of a company. But with property insurance coverage in place, your business will be able to rebuild or repair within a short period.
General liability
General liability is one of the most common types of insurance. In some states, you will not be able to operate your business without this type of cover. General liability insurance protects your business in case a person is injured, or their property is damaged because of your business operations.
A good example is someone trips and falls on your business premises or if their property is damaged while working within your business premises. Without general liability insurance, you will pay a lot of money in terms of medical bills and repairs.
General liability insurance protects your business by covering legal costs and settlements, usually awarded to the grieved party.
Nonetheless, what is covered by general liability depends on the state where your business is located. The amount paid by the insurer will also depend on the scope of the coverage as well as the maximum amount stipulated in the policy document.
Professional liability insurance
Also known as errors and omission insurance, professional liability insurance is very necessary for a business that provides different services such as consultation to customers. The insurance policy is generally meant to protect your business from negligence claims, offering sub-standard services, or failing to perform according to the laid-out procedures.
For instance, a customer can decide to sue a financial advisor for giving him or her wrong advice that resulted in thousands of dollars in losses. Or a patient can sue a private hospital for giving a wrong prescription that caused an injury.
But if you have professional liability insurance, the insurance company will help take care of all the expenses associated with the negligence case.
Business owner’s insurance (BOP)
A business owner’s insurance combines all the needed coverage that you would need for your business. In most cases, a business owner’s policy will include things such as property insurance, business interruption insurance, crime insurance, vehicle coverage, and liability insurance.
You can always dictate what should be included in a business owner’s insurance depending on the needs of your business. Most business owners prefer this type of insurance because it costs less compared to purchasing individual covers. But you should try to compare different providers before making the decision.
Data breach or Cybercrime liability
Technological advancement has come with its own share of challenges. Businesses around the world lose millions of dollars every year due to cybercrime activities. That is why it is good to ensure that your business is protected from losses related to a data breach.
The good news is that there are many insurance companies such as GEC that offer data breach insurance covers. The insurance policy is meant to protect your business from lawsuits or losses resulting from hacking or cyberattacks.
Cybercrime liability insurance is even more important in case your business does most of its transactions online. Hackers are always on standby for any loopholes in your network system to get in and steal customer information and money. The best way to stay ahead of them is to have a strong insurance policy.
Directors and Officers Insurance
This is also another important insurance policy that every business should have. It is aimed at protecting directors and officers against any actions they take that directly affect the profitability of a company.
If for example an officer or director of your company finds himself or herself in such a situation, then the insurance company will cover the legal expenses and any other costs related to the offense. Otherwise, all the costs will be upon the director or officer – something that can cause a strained relationship between them and the organization.
Product liability insurance
If you are in the manufacturing sector, then purchasing product liability insurance should be one of your priorities. You should look for particular products and find tailor-made covers for each one of them. This is because there is a likelihood of someone filing a lawsuit for damages caused by your products irrespective.
It does not matter whether you followed all the protocols or not, a product defect case can take any direction when it goes before a judge. The only way to be safe is to have a product liability policy in place that will cover any expenses associated with expenses incurred by faulty products
Commercial auto insurance
Commercial auto insurance protects all vehicles used in your business. You can apply for insurance for vehicles that carry your staff, products, or equipment. It is possible to cover for any vehicle in your company including trucks, SUVs, or cars.
In a nutshell, insurance covers can protect your business in many ways. Fortunately, there are many types of insurance covers that you can choose from. It is up to you to choose an insurance policy that is best suited for your business.
