Business Insurance

Business Insurance is insurance coverage that protects businesses from losses due to events that may occur during the normal course of business. There are many types of insurance for businesses including coverage for property damage, legal liability and employee-related risks. Companies evaluate their insurance needs based on potential risks, which can vary depending on the type of environment in which the company operates. It is especially important for small business owners to carefully consider and evaluate their business insurance needs because they may have more personal financial exposure in the event of loss. If a business owner does not feel he or she has the ability to effectively asses business risk and the need for coverage, he or she should work with a reputable, experienced and licensed insurance broker. A list of licensed agents for each state is available through the state's department of insurance or the National Association of Insurance Commissioners.

The Need for Business Insurance
Even if you don't think your business has enough assets to be sued, or if you believe because your business in incorporated, you're shielded from personal liability through the so-called "corporate veil," you still need business insurance. Why? Because absolutely anyone can be sued, judgments can be collected through wage garnishments and bank account seizures, and even corporate veils can be pierced under certain circumstances; indeed, the smaller your business is, the more likely that you can be held personally liable for debts through your personal assets. Your business needs business insurance because of the many risks and potential threats to its successful and continued operation; good, tailored business insurance policies can help protect you and your venture as much as possible.

Types of Business Insurance
Insurance coverage is available for every conceivable risk your business might face. Cost and amount of coverage of policies vary among insurers. You should discuss your specific business risks and the types of insurance available with your insurance agent or broker. Your agency can advise you on the exact types of insurance you should consider purchasing.

• General Liability Insurance: Business owners purchase general liability insurance to cover legal hassles due to accident, injuries and claims of negligence. These policies protect against payments as the result of bodily injury, property damage, medical expenses, libel, slander, the cost of defending lawsuits, and settlement bonds or judgments required during an appeal procedure.
• Product Liability Insurance: Companies that manufacture, wholesale, distribute, and retail a product may be liable for its safety. Product liability insurance protects against financial loss as a result of a defect product that causes injury or bodily harm. The amount of insurance you should purchase depends on the products you sell or manufacture. A clothing store would have far less risk than a small appliance store, for example.
• Professional Liability Insurance: Business owners providing services should consider having professional liability insurance (also known as errors and omissions insurance). This type of liability coverage protects your business against malpractice, errors, and negligence in provision of services to your customers. Depending on your profession, you may be required by your state government to carry such a policy. For example, physicians are required to purchase malpractice insurance as a condition of practicing in certain states.
• Commercial Property Insurance: Property insurance covers everything related to the loss and damage of company property due to a wide-variety of events such as fire, smoke, wind and hail storms, civil disobedience and vandalism. The definition of "property" is broad, and includes lost income, business interruption, buildings, computers, company papers and money.

Property insurance policies come in two basic forms:

• • (1) all-risk policies covering a wide-range of incidents and perils except those noted in the policy;
  • (2) peril-specific policies that cover losses from only those perils listed in the policy. Examples of peril-specific policies include fire, flood, crime and business interruption insurance. All-risk policies generally cover risks faced by the average small business, while peril-specific policies are usually purchased when there is high risk of peril in a certain area. Consult your insurance agent or broker about the type of business property insurance best suited for your small business.
• Home-Based Business Insurance: Contrary to popular belief, homeowners' insurance policies do not generally cover home-based business losses. Depending on risks to your business, you may add riders to your homeowners' policy to cover normal business risks such as property damage. However, homeowners' policies only go so far in covering home-based businesses and you may need to purchase additional policies to cover other risks, such as general and professional liability.

See Also

Business Insurance refers to the range of insurance products available to protect businesses from risks that might affect their success and financial health. It's essential for managing risks and safeguarding the assets, both tangible and intangible, of a business entity. Depending on the business type, size, industry, and specific risks, insurance needs can vary widely. Common types of business insurance include general liability insurance, property insurance, professional liability insurance, workers' compensation, product liability insurance, and business interruption insurance. Each of these insurance types is designed to cover different risks, ensuring that a business can operate with peace of mind and resilience against unexpected events.

• General Liability Insurance: Discussing coverage that can protect business owners from a variety of claims including bodily injury, property damage, and personal injury that can arise from business operations.
• Property Insurance: Covering insurance that provides protection against most risks to property, such as fire, theft, and some weather damage, including specialized forms like flood insurance or earthquake insurance.
• Professional Liability Insurance (Errors and Omissions Insurance): Explaining coverage that protects professionals and companies from bearing the full cost of defending against a negligence claim made by a client, and damages awarded in such a civil lawsuit.
• Workers' Compensation Insurance: Discussing insurance that provides wage replacement and medical benefits to employees injured in the course of employment in exchange for mandatory relinquishment of the employee's right to sue their employer for the tort of negligence.
• Product Liability Insurance: Covering insurance for manufacturers, wholesalers, distributors, and retailers against lawsuits arising from injury or damage caused by a product they made, distributed, or sold.
• Business Interruption Insurance: Explaining coverage that compensates for lost income during periods when a business cannot carry out its normal operations due to disaster-related damage.
• Cyber Liability Insurance: Discussing coverage designed to assist businesses in mitigating risk exposure by offsetting costs involved with recovery after a cyber-related security breach or similar events.
• Directors and Officers Insurance (D&O): Covering insurance that protects the personal assets of corporate directors and officers, and their spouses, in the event they are personally sued by employees, vendors, competitors, investors, customers, or other parties, for actual or alleged wrongful acts in managing a company.
• Commercial Auto Insurance: Explaining insurance that covers vehicles used for business purposes including protection against liability and damage claims.
• Employment Practices Liability Insurance (EPLI): Discussing insurance that provides coverage to employers against claims made by employees alleging discrimination, wrongful termination, harassment, and other employment-related issues.
• Risk Management: Covering the identification, assessment, and prioritization of risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability or impact of unfortunate events.
• Insurance Broker and Agents: Explaining the role of professionals who sell, solicit, or negotiate insurance for compensation, helping businesses find the right insurance products to meet their needs.

Further Reading

• 13 Types of Insurance a Small Business Owner Should Have forbes
• Small Business Insurance Basics iii.org
• Understanding Business Insurance Understand Insurance