What Does A Business Insurance Cover?

What Does A Business Insurance Cover?

We never know what the future holds, so it is always best to be prepared. Getting business insurance is probably the best investment that you can do for your business.

According to The Hartford, “business insurance can help pay the costs of property damage, lawsuits, lost business income, and other covered losses”.

Often, businesses will buy multiple coverages and combine several in one policy to protect themselves against specific risks that are unique to their situation.

A Business Owner’s Policy or BOP is among the most popular business policies and includes business property, general liability and business income coverages in one policy.

Chron also advises determining the type of insurance coverage needed to minimize any potential risks to the businesses.

Don’t know where to start? Here are some of the essential business insurance coverage options:

Business property insurance

This will help protect your business’s buildings and personal property. It might include furniture, tools, equipment and inventory.

Business income insurance

Helps replace lost income if you close temporarily due to a covered loss like theft or property damage from a fire. It can also help you continue paying expenses while your property is replaced or repaired.

Professional liability insurance

Liability insurance will help cover costs related to claims that your business made errors in providing its services.

For example, if you make a clerical error and it causes a client to lose thousands of dollars, professional liability insurance can help cover the costs if the client makes a claim. A business doesn’t need to do anything wrong to be sued.

Depending on the scenario, coverage would apply to defend a business if sued.

Workers’ compensation insurance

Compensation insurance helps cover costs to employees while they are unable to work after suffering a work-related injury or illness.

A commercial auto policy

This policy helps protect your business from the costs of a work-related auto accident. If you or an employee is in a crash while driving for business reasons, commercial auto can help cover the costs that result from the accident.

Commercial umbrella insurance

This add-on insurance acts as a safety net that provides additional coverage when other liability policies reach their limits. For example, say a customer slips and injures himself in your store. He then makes a claim against your business for $200,000.

If your general liability policy has a limit of $150,000, commercial umbrella insurance will help cover the remaining $50,000. Businesses find this coverage is essential for helping protect against financially devastating lawsuits and claims.

Data breach insurance

This kind of insurance will help protect your business from the costs of cyber threats or attacks.

Commercial flood insurance

This insurance helps protect your business from the costs of covered flood damage. This includes damage to the physical location of your business as well as its assets. For example, say melting snow floods the basement of your business. The floodwater damages the floor and some tools. If this happens, commercial flood insurance can help cover the cost to repair the damaged floor and appliances.

Employment practices liability

[EPL] helps protect your business if an employee sues you. Even if you are not at fault, defending a lawsuit can be costly. Employees may make a claim against your company for reasons such as discrimination, harassment or wrongful termination. If they do, EPL can help cover the related costs.

Risk engineering

Risk engineering professionals evaluate your business’s risk exposures and then create improvement plans, and programs to train you and your staff to safely handle accidents and follow safety protocols. This can result in a safer, more productive and profitable business.

Multinational insurance

This insurance can help streamline coverages if your business has operations outside the U.S.

Surety & fidelity bonds

A surety bond is a contract between three parties that help ensure a project gets completed or a commitment is met and guarantees payment if they are not. Fidelity bonds are a form of insurance that protects businesses from financial loss due to employee theft or fraud.

Home-based business insurance

Home-based insurance helps cover the costs of property and liability risks to businesses that operate out of a business owner’s home. If you keep supplies, equipment or other business property at your home, or have customers stopping by, consider adding this coverage.

Chron also listed Commercial Liability Insurance which covers claims against the business by third parties. The claims generally stem from accidents that occur on the business premises or injuries to third parties for which the company becomes legally liable.

The business owner must be legally responsible for the injury, typically depending on the location of the accident. In addition to insurance coverage for injuries to third parties, commercial liability policies may cover damage to the property and company products and may provide independent contractor coverage.

Standard business insurance policies don’t cover everything, but it is possible to add coverage riders to standard procedures to help cover additional risks.