What Is Business
Insurance? Business insurance coverage 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.
Business insurance refers broadly to a class of insurance coverage intended for
purchase by businesses rather than individuals. Businesses seek insurance to
cover potential property damage, to protect from lawsuits, or contract
accounts for about half of the U.S. property casualty insurance industry, and
includes many insurance products known as "commercial lines".
Understanding Business Insurance, 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 a loss.
If a business owner does
not feel he or she can effectively assess business risk and the need for
coverage, they should work with a reputable, experienced, and licensed
insurance broker. You can obtain a list of licensed agents in your state
through your state's Department of Insurance or the National Association of
Insurance Commissioners. Also known as commercial lines insurance, these
coverages include property and casualty insurance products for businesses.
Insurance helps keep the economy running smoothly by protecting businesses from
potential losses they couldn’t afford to cover on their own, which allows
businesses to operate when it might otherwise be too risky to do so. Commercial
policies may be contrasted with personal lines insurance.
Types of Business
Several types of business insurance that small
business owners might consider, including the following:
Insurance insures against negligence claims that result from mistakes or
failure to perform. There is no one-size-fits-all professional liability
coverage. Each industry has its own unique concerns that should be addressed.
Property insurance covers
equipment, signage, inventory, and furniture in the event of a fire, storm, or
theft. However, it doesn't cover mass-destruction events like floods and
earthquakes. If your area is at risk for these issues, you'll need a separate
policy. Another exception is personal property that is very high value and
expensive—this is usually covered by purchasing an addition to the policy
called a "rider." If there's a claim, the property insurance policy
will either reimburse the policyholder for the actual value of the damage or
the replacement cost to fix the problem.
don’t cover home-based businesses like commercial property insurance covers
businesses. If you're operating a home-based business, inquire about additional
coverage for equipment and inventory.
If your business
manufactures products to sell, product liability insurance is very important.
Any business can find itself named in a lawsuit due to damages caused by its
products. Product liability insurance protects a business in such cases.
Any vehicles used for
business should be fully insured. At the very least, businesses should insure
against third-party injury, but comprehensive automobile insurance will cover
the vehicle in an accident, as well. If employees are using their own cars for
business, their own personal insurance will cover them in the event of an
accident. One major exception is if a person is delivering goods or services
for a fee, including delivery personnel.
Business interruption (or
continuation) policies are a type of insurance that is especially applicable to
companies that require a physical location to do business, such as retail
stores or manufacturing facilities. Business interruption insurance compensates
a business for its lost income during events that cause a disruption to the
normal course of business.