One of the most important things every new business needs to consider is business insurance. There are several types of business insurance out there, and every business needs at least one type to protect it and its assets. Most businesses need general liability insurance, and any business with employees should also get workers’ compensation insurance. The type of business you have depends on what type of insurance you’ll need.
Here are five of the most common types of insurance for businesses.
#1: General Liability Insurance (GLI)
This type of insurance is the most common type that all businesses tend to acquire. General liability insurance covers claims of injury and property damage. For instance, if a customer or client were to slip and fall in your establishment, GLI will cover any medical bills and costs related to a lawsuit. It also covers any property damage that may have occurred to a client’s belongings, whether working at their home or on your property.
In the next 10 years, about 40% of small businesses are likely to see some sort of claim, whether it be a customer getting injured on their property, or being a victim of a burglary. Neither of these incidents can be predicted, but it’s better to be on the safe side and have some general liability insurance to cover these incidents.
#2: Professional Liability/Errors and Omissions
Also known as errors and omissions (E&O), professional liability insurance protects your business in the event that you or one of your employees makes a mistake in services. This includes both actual harm done and inaccurate claims of harm. E&O insurance is usually only required by institutions providing a service or advice to clients, rather than providing products to customers. It’s important to note that E&O insurance does not cover the same thing that general liability insurance covers, so you will need both if your business provides advice and/or services.
#3: Workers’ Compensation
This type of insurance is specifically for your employees. It covers any medical bills, loss of wages, disability benefits, or funeral costs if an employee were to suffer any injury/illness or death resulting from work. It also helps cover any costs resulting from legal actions from the employee’s family.
Even the safest businesses have accidents happen, and if you employ other people (or even just one other person), you’ll need workers’ compensation insurance. Depending on the type of industry you’re in, the size of your business, and which state you live in, your workers’ compensation mandates and statutes will differ.
#4: Commercial Property Insurance
Commercial property insurance not only protects the physical building housing your business but also covers any equipment used in running your business. It covers property damage resulting from a fire and it also covers any merchandise stolen due to a burglary. Things it does not cover include damages covered by GLI or E&O and flood damage.
#5: Commercial Auto Insurance
Many businesses require the use of some sort of transportation; many times, the use of a company car or truck. Coverage includes that of an accident, medical bills, and even a fatality.
Commercial vs. Personal Insurance
Your own personal car insurance won’t cover any of the above-mentioned if used for business purposes. Commercial auto insurance was created specifically for business-related matters. It will, however, cover any rentals used to conduct business and you can purchase commercial auto insurance for your employees who use their personal cars for business purposes. Just like with personal auto insurance, you’ll need to calculate the best rates for you.
If you want to succeed in your business, you’re going to need some type of insurance to not only protect the business itself but your personal assets as well.
There are several other insurance types, such as business income insurance and commercial umbrella insurance. Business income insurance covers costs in the event that your business can’t operate normally; commercial umbrella insurance extends coverage on existing policies. The main thing to remember is that you’ll want to get the insurance policies that will best protect your business in the event of any unfortunate incident.