Business owners are masters at taking on risk in order to maximize their profits.
However, as they grow, businesses can afford to pass some of that risk on to other. Business insurance is designed to pass risk from the business owner in areas that would be a catastrophic loss to the business.
This business insurance guide will detail the main types of business insurance and how to get the lowest prices from your quotes.
What is Business Insurance?
Business insurance, as the name suggests, is designed for businesses. This insurance can cover your business for risks that might occur during normal day-to-day operations. Some issues involved in business insurance include property damage, ransomware insurance, legal liability insurance and risks related to employees.
Business insurance can also encompass group policies that employers offer employees as part of their benefits package.
Types of Business Insurance
It’s essential for those who run small businesses to be plan carefully and protect themselves from risk. There are a number of different risks that a company might face, and a careful evaluation of these should always be conducted.
In this section, we’ll look at the various types of business insurance and how they work.
Professional Liability Insurance
Professional liability insurance pays out when a company is facing claims of negligence. Let’s say that you have a tree trimming business, for example. If your employees mess up and drop a tree branch onto a passerby or passing car, that’s a personal injury attorney’s dream case.
Liability insurance also covers incidents that occur on your property. Say, for instance, that someone slips and falls in your store because the floors are slippery. Liability insurance will pay out.
Another area that could result in liability claims, and one that few of us considers, is a data breach. Liability insurance could handle claims if it’s found that your company was negligent in protecting client data.
Liability insurance is essential.
Property insurance covers the actual business premises, inventory, equipment, and so on if it’s lost, stolen, or damaged. You’ll have to check exactly what is covered carefully. You usually will have to pay extra for flood or earthquake insurance. Rioting and looting may also not be covered.
It’s important to see what the conditions for full coverage are. What security measures need to be maintained? Have you completed the application 100-percent correctly? Discrepancies here are often used as a reason for insurers to decline claims. We do also need to mention that damages related to normal wear and tear won’t be covered.
This kind of insurance is also essential. What would you do if your business premises burned down during the night, or all your inventory was stolen? Would you have the cash reserves to be able to replace and rebuild? Would you be able to borrow enough money? Property damage or loss can set a business back significantly, and it can be hard to recover if you don’t have insurance.
If you’re running a business from home, your standard homeowner’s insurance won’t provide adequate protection for you. You’ll need to make sure that you tell the insurer that you’re running a business from home and update your cover accordingly.
If something happens, like the ovens from your home baking business cause a fire that burns down the house, a standard homeowner’s policy claim is likely to be declined. The insurer can use the excuse that business was being conducted on the property, so the risks were higher than they would typically be.
Product Liability Insurance
Product liability is another essential insurance to have if your company manufactures items. If something goes wrong with a specific product batch, you could find yourself on the wrong side of a liability suit.
At the very least, your business needs to have third-party, fire and theft coverage on all vehicles. Comprehensive insurance is even better. That way, if the vehicle is severely damaged, or written off, your business doesn’t have to come up with the money to replace it.
If you’re using your personal vehicle for business purposes such as delivering goods, you must inform your insurer. Personal insurance on vehicles won’t pay out if it transpires that they were being used for business purposes.
Business Interruption Insurance
We seem to be talking about a lot of different insurance policies here, and that means a fair amount of money. Business interruption insurance may not seem all that important with all the other expenses piling up, but it is worth considering.
Business interruption insurance covers you for lost income due to unforeseeable circumstances. Say, for example, that the store burns down, you’ll be compensated for the loss of income while it’s being rebuilt.
There is also another aspect to this kind of insurance – it can be used to cover the owner and/ key personnel. If you run a one-person show, what happens if you’re sick? Business interruption insurance can help by providing funds for employing someone temporarily.
Employee Insurance Policies
If something happens to one of your employees at work, you could face a lawsuit. Workman’s compensation will take care of injuries or illnesses related to work. It won’t be any help, though, if the employee or their family decide to sue the company for negligence.
Employee Benefit Policies
Companies can sweeten the deal for employees by negotiating group rates with insurers. These policies could be anything, from health insurance through to funeral coverage. Whether you subsidize the policies or not will depend on the benefits you want to offer.
Either way, the employees benefit because they have access to insurance at a much more affordable rate.
This is a relatively new kind of insurance being offered, so you might not have heard of it. It covers a company if their computer systems are breached, and you are locked out. Ransomware insurance might pay the ransom, pay for the systems to be restored, and so on.
If you think that cybercriminals won’t bother with your business because it’s too small, think again. Small businesses are one of the favorite targets for cybercriminals. They might be laxer or have smaller security budgets than large corporates. This makes them an ideal target.
Getting Business Insurance Quotes
With any of these types of business insurance it is imperative that you get quotes from multiple companies.
Some companies may be able to bundle policies so you can enjoy multi-policy discounts.
Finally, make sure that you are always comparing policies that offer the same amounts of coverage. You do not want to be getting a policy that is less expensive because it offers much less coverage.
Top Companies for Business Insurance
Cover Wallet – With a focus on affordability, Cover Wallet business policies are some of the most popular.
Hiscox – Known for their fast online quoting, Hiscox business insurance is quickly becoming a top name in the market.
Progressive – A long time player in the commercial insurance market, Progressive is the most well known name in business insurance.
Business Insurance Guide Final Thoughts
There are a lot of different types of insurance that businesses should seriously consider investing in. You might be able to get good discounts by dealing with the same companies for all policies, so, you could save money there.
Business insurance is there for a good reason – to ensure that your business can go on as usual and recover as quickly as possible if disaster strikes.