Business Insurance: What Is It & What Does It Cover?

KEY TAKEAWAYS

• Business insurance protects you, your employees, and your customers.
• There are many types of risks that businesses face, from natural disasters to hacking attacks.
• Businesses need insurance coverage for many of the same reasons as a personal or household business.

What Is Business Insurance?

Business insurance is a policy that protects your company from potential financial losses and/or liability. This type of coverage is essential for any business owner. Business insurance serves to protect against financial risks. Such risks can negatively affect your business.

Some of the most common types of business insurance include:

• Property insurance
• Liability insurance
• Workers’ compensation insurance
• Business interruption coverage

What Does Business Insurance Cover?

Business insurance covers a wide range of risks that could negatively impact your business. These include:

Damage to Your Property

This includes damage to inventory, equipment, and other items that your company owns.

Loss of Income

This includes money that your company earns that becomes lost because of a natural disaster. It can also be events that prevent an employee from coming to work.

Health Care Benefits for Employees

This covers the cost of medical expenses for employees who suffer injuries or get sick because of their job.

Legal Fees

This covers legal fees from lawsuits filed against your company.

Contractual Obligations

This includes things like lease obligations and lease termination fees.

Business Interruption

This covers your lost revenue if your business gets interrupted by a natural disaster or similar event.

Types of Business Insurance

As a business owner, it’s important that you invest in the right insurance. You want to ensure that your employees are cared for and covered. You also want to make sure your property has protection in the event of a natural disaster or vandalism.

Let’s explore some of the most common insurances for businesses. We’ll also discuss what they cover so that you can determine what you need.

Business Interruption

This covers lost revenue and future expenses if your business gets interrupted by a natural disaster or attack.

Property Insurance

This protects your things of tangible value, like furniture, fixtures, and business equipment. Your personal assets require protection just like your employees. This is true whether you run a home-based business or work in a commercial building.

Other protected items of tangible value include inventory, machinery, and buildings. Damage to property can skyrocket quickly. So you want to know that you have the right types of insurance. This includes commercial property insurance.

You’ll need to speak with your insurance agents about which is right for you. The type of business insurance you need depends on various factors.

Commercial Auto Insurance

Do you have company vehicles? If so, you’ll need additional coverage for them. You want your business insurance policies to protect not just your physical assets but your workers, too. Commercial auto insurance protects against third-party injuries. So if a worker gets in an accident, you won’t be financially liable.

This can include bodily harm to another driver. So you’ll want to fully understand your policy limit and coverage limits. Ask what your commercial auto insurance entails.

Workers’ Compensation

This covers the costs of medical expenses and lost wages if employees get injured on the job. When an employee suffers a bodily injury at work, you need to know you’re protected. Workers’ Compensation insurance gives you peace of mind that you won’t get a liability claim against you.

Malpractice Insurance

If you’re a medical provider, you need malpractice insurance. This protects you from liability if you cause harm to a patient. Malpractice lawsuits are often complex. You could have to pay potential damages if your practice doesn’t have coverage. So it’s crucial that you have insurance protecting you.

Professional Liability Insurance

Professional liability insurance is a policy that protects you from claims of negligence. This can also include claims of wrongdoing made against the business. A business may not know who their clients are or which of their employees have caused a claim against them.

If a person or business gets sued for negligence, they will want to prove that they did not act negligently. This is where professional liability insurance comes in. Medical costs associated with these lawsuits can be pricey.

As such, you want to make sure that you have financial protection. Talk to a licensed agent about the best insurance package for your firm. You might need additional insurance plans to limit your risk. But the investment is worth it.

Financial Responsibility

This covers the expense of any damage or loss that is not covered by another type of policy. Think of this as commercial umbrella insurance. This ensures that you have ample insurance protection. 

The best business insurance plans are ones that accommodate your needs. Your business owners insurance policy should entail everything your business needs. This includes employees, vehicles, liability, and more.

A business without insurance is at risk of financial ruin. An accident is all it takes to wipe you out. Don’t chance it; get business insurance where you need it most.

Summary

Business owners don’t want to miss out on the potential profits that come with owning a company. That’s why they need to protect their investment with business insurance coverage. Business insurance protects against financial losses and liability in the case of any type of risk that could impact the company.