Breaking Down Business Insurance Coverage
So, you've decided to start a business. That's exciting but let's talk about protecting your assets and your reputation. First, you will need business insurance. Second, there are many kinds of business insurance, and selecting the right coverage is important.
There is insurance that protects your business if there is an accident on your property. There is insurance that protects your business if you or an employee makes a mistake. And there are dozens of different policies that cover everything from commercial fleets to product liability and everything in between.
What Is Business Insurance?
Business insurance is a group of policies designed to protect companies from common risks. These policies can save the day if your business has a lawsuit, incurs property damage, an employee sustains an injury, or your operation is interrupted.
Business insurance policies come in different types. While some are optional and often enhance coverage, you'll need a minimum of business liability insurance. If you have a physical location, you'll need to add on commercial property insurance. If you employ others, you'll need workers' compensation insurance.
In addition to these policies, your industry or profession may have further requirements. For example, it is common for doctors to carry medical malpractice insurance. This is a special type of professional liability coverage with policy limits in-line with the type of medicine being practiced.
Common Types of Business Insurance
Depending on the policy, business insurance can either pay you for damages, losses, or interruptions to business. Or, business insurance can pay your liabilities to others. And many types of business insurance are required by law.
General Liability Insurance
General liability is the core of most business owner insurance policies. It typically provides coverage for lawsuits originating outside of your company. It covers things like bodily injury, property damage, product liability, and advertising claims—these policies typically payout to the 'injured' party.
Commercial Property Insurance
Commercial property is another component of a typical business owner's policy. It will cover damage to physical property like your place of business. It protects things like theft of laptops, weather-related damage, accidental damage, and vandalism. These policies typically payout to the business owner or the business to cover losses incurred.
Workers' Compensation Insurance
This insurance pays employees and medical providers as appropriate when an injury occurs on the job. Workers' compensation insurance is federally-mandated protection that also protects you from a lawsuit originating from an employee injury. This insurance is required for all employers with coverage amounts determined at the state level.
Commercial Auto or Fleet Insurance
Commercial auto insurance covers the same things your personal auto insurance covers, like comprehensive and collision damage, theft, and vandalism. It's designed for businesses that spend more time on the road than the average driver. Commercial fleet coverage is similar but designed to cover your team as drivers using your company vehicles. These policies payout for medical bills and to individuals who suffer injuries in a related accident. Most states have minimum auto insurance requirements, and commercial auto and fleet policies are designed to meet these needs.
Business Income Insurance
Business income insurance can help you cover important operating expenses like rent, payroll, and taxes in the event of a covered interruption to your business service. If you can't do business because of theft, fire, falling object, lightning, or another covered event, your business income insurance policy can keep your business afloat temporarily.
Professional Liability Insurance
Professional liability can provide additional coverage for certain events that are not otherwise covered under your general liability policy. Some industries and high-risk professions have special liability policies with higher limits and specialized coverage, like medical malpractice or errors and omissions. These policies protect you from customers or patients that claim an injury or damage resulting from your services. These policies range from 'nice-to-have' in some fields to required in others.
Cyber Liability Insurance
The digital world brings with it a new set of risks for you and your company. While collecting customer data helps run your business, it's also a big risk. According to tech-giant IBM, the average cost of a data breach in 2021 was 4.37 million dollars. Assuming you don't have a stash of cash that size laying around, cyber liability insurance is a must-have.
Business Identity Insurance
Your business invests a lot into branding. Your brand identity, including logos, artwork, colors, fonts, and more, is key in helping your customers recognize your brand. Your identity helps you build a reputation that attracts loyal customers–and it's worth protecting.
Someone looking to make a quick buck could come along and use your established brand image to peddle a knock-off product or service for a lower price. This hurts your reputation and your business, leaving you to sue for losses. When the worst happens, business identity insurance can help you repair your business and professional reputation.
Commercial Umbrella Insurance
Umbrella insurance provides a little extra protection for big events. In business, it is easier than you might think to max out policy limits. This policy kicks in after your regular coverage has hit its limit. It's usually optional but always a good idea to make sure you're well protected.
The Takeaway on Business Insurance
If you're operating a business, you need insurance. It's that simple. Even if you're a one-person show, there are still business risks every day. If a customer trips entering your store and breaks a bone, you're liable for those medical bills. If you sell a lotion and it causes severe chemical burns with permanent scarring, you're on the hook for medical bills and pain and suffering. And if your office catches fire and you can't conduct business for months, you'll need a way to pay the bills without any cash flow. These are the perils that business insurance is designed to protect you from.
Speak with our friendly agents at CIIG to decide what coverage is best for your business needs. Get in touch today!