Types of Business Insurance Every Company Needs
Running a business involves numerous risks, from natural disasters to lawsuits. Business insurance provides a safety net, protecting your company from significant financial losses. Here are the essential types of business insurance every company should consider.
General Liability Insurance
General liability insurance covers legal hassles due to accidents, injuries, and claims of negligence. It protects against costs related to bodily injuries, property damage, medical expenses, libel, slander, and the cost of defending lawsuits. Even if your business is home-based, you need liability insurance as a precaution against potential risks.
Property Insurance
Whether you own your building, lease space, or work from home, property insurance is a must. This insurance covers equipment, signage, inventory, and furniture in the event of a fire, storm, or theft. However, mass-destruction events like floods and earthquakes are generally not covered under standard property insurance policies.
Professional Liability Insurance
Also known as Errors and Omissions (E&O) insurance, professional liability insurance covers a business against negligence claims due to harm resulting from mistakes or failure to perform. Every industry has its own set of concerns that require unique coverage. A professional liability policy will cover the defense costs and any resulting damages up to the policy limit.
Workers' Compensation Insurance
Once the first employee has been hired, workers' compensation insurance should be added to a business's insurance policy. This covers medical treatment, disability, and death benefits if an employee is injured or dies as a result of their job. Even if employees perform seemingly low-risk work, slip-and-fall injuries or medical conditions such as carpal tunnel syndrome could result in a costly claim.
Business Interruption Insurance
If a disaster or catastrophic event does occur, a business's operations will likely be interrupted. During this time, business interruption insurance can provide a business with an income replacement. This type of insurance is especially useful for companies that require a physical location to do business, such as retail stores and manufacturing facilities.
Frequently Asked Questions
What does general liability insurance cover? General liability insurance covers legal fees and damages related to bodily injury, property damage, and personal injury claims made against your business.
Do home-based businesses need property insurance? Yes, home-based businesses need property insurance to protect against potential risks like fire, theft, or storm damage to equipment and inventory.
What is the difference between general liability and professional liability insurance? General liability insurance covers physical risks, while professional liability insurance protects against claims of negligence and mistakes in professional services.
Why is workers' compensation insurance important? Workers' compensation insurance provides medical and disability benefits to employees injured on the job, reducing the risk of lawsuits against the business.
How does business interruption insurance work? Business interruption insurance compensates for lost income during periods when a business cannot operate due to a covered event, helping to maintain financial stability.
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