If you own a small business, you probably know that business insurance is a critical consideration. Insurance not only protects your company from various forms of liability and risk, but also helps ensure that it complies with state and local regulations. This blog shows you everything you need to know about business insurance and how to protect your business.
Here’s what you need to know about business insurance and how to protect your business.
The importance of business insurance
In general, insurance is designed to protect you against risks that you cannot afford. To ensure this protection, you pay a business insurance premium, with no money-back guarantee. If you ever need to use that policy, it will pay to cover unexpected business expenses, like an injury or a lawsuit.
There are several different types of business insurance policies, and the process of choosing business insurance can be simple. It’s a good idea to hire an insurance professional to guide you through the process, assess your needs, and help you choose the best policy for you.
The different types of business insurance
The type of commercial insurance your business needs stems from what type of business you are in and who you serve. Here are the several most common types of business insurance:
1. Property insurance
Property insurance is designed to protect your business’s physical property against loss. This coverage typically covers your business buildings, personal property (including furniture and office equipment), and vehicles against damage or theft. Policies can cover the cost of the physical property, as well as any income the property would have generated. In many cases, earthquake and flood coverage are special additions to your insurance. Check with your adviser or agent to be sure.
2. Liability insurance
Liability insurance protects you and your business from unintentional injury to other people, employees, customers, and businesses. Unintentional injuries can arise from negligence. These damages include personal injury such as slander or defamation, as well as bodily injury associated with defective products and operations. The financial risks associated with this type of liability can include medical expenses, court-awarded damages, and fines. Depending on your business and the type of business you have, you may be required by law to carry liability insurance. In some cases, liability insurance is required to maintain a professional license.
Liability insurance plans generally do not cover intentional injuries or unfulfilled contractual obligations. It is a good idea to review what is covered and what is not covered with your insurance advisor and attorney.
3. Workers’ compensation insurance
In the US, worker’s comp insurance is required for businesses with employees. Workers’ compensation insurance offers risk management designed to help your business grow and protect you against big expenses. For most new businesses in California, the State Compensation Fund is a good source of workers’ compensation insurance, although you may want to purchase a more comprehensive policy as your business grows.
4. Additional insurance
There are other insurance policies available to help small businesses control risk. These include automobile coverage for company vehicles and excess liability coverage. While not all companies need this, it’s smart to talk to your insurance advisor about the best way to protect your business.