Types of Business Insurance
There isn’t anything in life that is certain, which also holds the same logic when it comes to the business operations of a company. Other than the human disasters in a business, there are other factors like the terrorism, storms and natural disasters that can wreak destruction in your professional life.
And due to such disasters and turbulences, it is vital to check out the various business insurance types and ensure that you have the right ones so that there isn’t any unexpected situation that would stop your business to function or get it off the tracks.
To understand this better, here are some of the basic business insurance types that are important to your business and its operations:
Error and Omissions (E&O)/Professional Liability Insurance
In case your company is involved in any professional services which include designing products, making recommendations, giving professional advice, etc., there are chances where you can be sued for providing the wrong recommendation or faulty advice that results in harming the person. With the help of an errors and omissions policy, your company would be protected against such errors in judgment and pay for any legal costs up to the policy limits.
Workers Compensation Insurance
Almost all the states in the US needs the employees to hold the worker’s compensation insurance as it is another one of the important business insurance types. However, if you are in Texas, you wouldn’t need the worker’s compensation insurance.
The condition in this is that an employer needs to have just a few number of employees as per the state laws. And a worker’s compensation would pay for the lost wages and the medical care for those employees that get hurt or injured during their job. This coverage pays for any damage caused, regardless of the person responsible for the accident.
In case an employee dies on the spot, the compensation benefits would pay the family of the employee with the applicable amount as per the policy. As a matter of fact, if your business is a small one, you might not be legally liable to hold the worker’s compensation insurance. But this depends on the state in which the company has been incorporated.
Nonetheless, even though it is not legally required in some states, it is advised to keep it so that you stay on a safe side and remain protected from the legal liability when an employee gets hurt during the job. It can save you a fortune that you might have to spend on the lawsuits and otherwise if you do not have the insurance.
Commercial Auto Insurance
If there is any vehicle that is used by you or for anything for your business should be included in the commercial auto policy, which is another one of the most important business insurance types. Most of the personal auto insurance policies do not include the vehicles that are used for any business purposes.
With the commercial auto policy, you would be able to pay for any property damage or any bodily injury that is caused to you or others with the business vehicle. Moreover, you can easily customize the commercial auto insurance policy as per your particular needs like paying the amount for replacing the vehicle that has been involved in an accident.
Being the owner of a business, this is one of the most critical business insurance types as you could be sued by anyone in case there is any accidental damage that was caused due to the negligence of your business services which caused harm to another person. An example can be a defective product of your company that has hurt someone.
With the liability insurance, it would pay for any damage caused to the other person. Moreover, it also pays for the legal expenses, if any situation comes up and you are sued. The liability policy would also pay for any medical fees for those who have been injured due to your company’s mistake.
Out of all the business insurance types, this is one type of insurance that many actually have and it is advised that you should have it. The business property insurance policy helps you in case your business incurs a loss, and there is any damage to the property of your business in this condition.
And with this, not only does your place of business get protection, the contents in your office such as the computers in the office, the office furniture, the business inventory and many other essential items for your business to run smoothly.
There are many property insurance policies that also offer the payment for any further damage that might be caused to the business after any great loss like a fire. The payments for the losses, in this case, includes things like the debris removal. You would also get the expenses needed to keep running your business normally until and unless all the damage from the loss gets repaired.
Other than the above-mentioned business insurance types, there are a few extra business insurance types that most of the businesses might need. Here are the business insurance types you might need due to the business type that you have:
The excess liability policy, which is also called the Excess Casualty policy is another one of the business insurance types that offers extra protection from any catastrophic event that includes the damages caused by a hurricane to your business. Let us say that due to a damage or your company’s roof blew off and your customers were harmed.
For this, you would need some extra funds that are of limits of your policy. In any such case, the excess casualty policy would be able to cover all the additional costs that you might have to put in. This policy is almost the same as an umbrella policy.
Employment Practices Liability
Another one of the business insurance types is the Employment Practices Liability policy that protects you in case an employee takes you to court for any claim against discrimination. Discrimination here includes the ones like wrongful termination, sexual discrimination, disability, race, age, or any other kind of discrimination. This policy would cover all the claims like these that are employee-related.
Directors and Officers Insurance
The Directors and Officers Insurance policy is another one of the business insurance types that almost all the entrepreneurs should hold. It protects you as an officer or director of the company in case any of your action has a negative effect on the profitability of the company. It also protects when the company gets sued due to some adverse action of yours in the business. With this policy, all the legal fees and damages would be covered.
Data Breach Insurance
With all the other troubles in the world, you might have heard many times where hackers were able to get to the company’s private information like the details of the customers or the employees and create more trouble. Well, if your company holds such information on a server or a computer, it is better than you have it protected.
The Data Breach insurance is one of the best business insurance types for this case where it secures the owners of the company from any legal liability that comes out from the above-mentioned case, regardless of how the details were leaked which can be by some other means like a paper file or even just electronically.
Transportation of Hazardous Materials Liability Insurance (HAZMAT)
The HAZMAT insurance is one of the business insurance types that covers the transportation of any of the dangerous supplies by aircraft, boat, train, or truck. With this policy, the activities like site pollution cleanup, in-transit coverage, loading/unloading cargo, and any ongoing contamination that was caused a spill of dangerous substances are all covered by this policy.
In short, if your company has activities that involve any dangerous substances or so, it is better to have the HAZMAT insurance that is an essential legal requirement for any hazardous material haulers along with the other business insurance types that are applicable for your company.
Business Interruption Insurance
Another one of the vital business insurance types is the Business Income insurance that also goes by the name “Business Interruption Insurance.” It basically works as the support for a commercial property policy, a Commercial Package Policy (CPP), or a Business Owners Policy (BOP).
In case you need to cease your business processes because of some unexpected event or any disaster which has caused the business property to be damaged, it would cover the operating expenses till all the repairs are done and the business operations move smoothly again.
Engineers and Consultants E&O Insurance
If your company is all about consultations, engineering or has a little of both, there are chances that you can face legal obligations due to the services you provide. It also includes any damage that is caused by any of the contractors that you utilize while you outsource the professional services of your business.
With the Engineers and Consultants E&O Insurance, you would get the protection in case any of the contractors working with you are careless, and others get affected by some the damage caused by them. A few of the clients also have the requirement where the contracts need to have the Engineers and Consultants E&O insurance prior to the hiring phase.
Pollution Liability and Environmental Insurance
If you have a general liability policy for your business along with the other main business insurance types, but you do not have the Pollution Liability and Environmental Insurance, it might contain the pollution exclusions. With this, your business would be left unprotected against any of the losses due to any pollution related issue.
It is vital for every business owner to appraise their insurance requirements for the pollution liability along with any of the other kinds of environmental insurance. This insurance type is crucial for those business people who might be involved in environment messes.
Without it, if there is any case that is placed on the business then cleaning up any environmental waste later on along with the lawsuits can potentially cost millions of dollars. Moreover, not every pollution insurance would be right for your business. Depending on what your company offers and the hazards it might create, you would need to get the proper pollution liability coverage for it.
Underground Storage Tank Insurance
Does your business have an underground storage tank? Well, these tanks a particular kind of uncertainty for the owners of a business. Let us say that there is a leak in the underground tank and it was holding some hazardous materials. This would cost your business a hefty amount, and it is obvious that you wouldn’t want such cases to occur and spoil your business.
With the Underground Storage Tank Insurance along with any other business insurance types that are vital, you can save your business from any financial disaster due to an accident in the company with an underground tank. This insurance would pay for the activities like the liability costs, and site cleanup so that the leak does not cause any damage to any other person around the property.
Terrorism is something that you hear a lot again and again around the world, and your business can be a victim of such cases. So, to cover all the losses during a terrorist attack that can take place at any time and anywhere, the Terrorism Insurance is a must along with all the other business insurance types that you have for your business. It would protect your company work progress against losses that is resulted from any of the terrorist activities.
In case you felt that you only needed the property and the liability insurance for your business interests, the above list would have proven you wrong by now. So, do not wait to suffer from any such situations since you do not want to hold all the important business insurance types suitable for your business.
Trust us, you would bring in more trouble and loss with this decision, which is why it is crucial to have the insurance made as per your company needs and protect your business from every side. And if you still haven’t started a business yet, head over to Inc Paradise to get help with registering and incorporating your business.