From the day a business is started it is exposed to different risks. There are things that could wipe out your business even before it gets off the ground. These, for instance, include lawsuits, lack of legal compliance or catastrophic events. Fortunately, there is a wide range of business insurance types to help protect your asset from potential risks and losses. This article focuses on the most common types of commercial insurance that you must have in place as soon as possible.
General Liability Insurance
Every business, including those that are home-based, must have liability insurance. This type of insurance covers your business in the case of a lawsuit that arises from injuries, accidents or negligence. If your employees, products or services cause bodily harm or property damage to a third party, then liability insurance will cover for medical expenses and legal representation. No individual expects to be sued but there is always a possibility for this and therefore, you cannot leave your business open to such situations.
From a small company to a large retail one, property insurance is a must. Property in the business world not only involves the building itself but other items as well. These include furniture, files, computers, the stock in the warehouse and other equipment needed to successfully run the company. This type of insurance also covers the building if it is owned by the business. Property insurance covers damages or losses from theft and accidental damage as a result of vandalism, fire, and acts of nature.
A business must add workers compensation insurance once the first employee is hired. This policy gives benefits to employees for on-the-job injuries or when they fall ill from work-related factors. The employee is prohibited from bringing a negligence lawsuit against the business owner for the on-job-injuries. This is why the employer is required to have this type of insurance for the payment of medical bills and damages. There are many options for workers’ compensation insurance and therefore, employers should read their state’s statute to make sure they are in compliance.
Commercial Auto Insurance
If vehicles will be used for business-related tasks, they should be fully insured to protect the business owner and employees against liability should an accident occur. This type of insurance covers third-party injury and the vehicle itself if it is stolen or damaged. If the employees are using their own vehicles for company purposes, they will be covered by their own personal insurance if an accident occurs. The case is however different if they were delivering goods and services for a fee. Higher liability is required if the vehicle, for instance, is used to transport heavy goods.
A disaster or catastrophic event can interrupt a business’s operations. This simply means that the business will experience loss or damage to the cash flow or profit because of the staff’s inability to work, make sales, or manufacture products for a certain period of time. Business interruption insurance ensures that bills, payrolls, and other fixed costs are paid when the business is shut down. This policy compensates the business for its lost income based on the profits that would have been earned during that time.
Errors and Omissions Insurance (E & O)
E & O insurance, also known as professional liability insurance covers a business against negligence claims caused by business professionals who make inadvertent mistakes that cause harm to a third party. For instance, if a consultant does not give a client all the necessary information relating to a project that causes massive losses, this insurance policy can be used to pay for the losses. Professional liability insurance can be customized to address the different concerns of different businesses.
A business with the right insurance in place can be able to avoid a major financial loss when faced with lawsuits or catastrophic events. Some of these business insurance types are required for all businesses while others vary depending on the type of the company being run. The requirements, however, vary by state and therefore business owners should seek out legal guidance to decide the type of insurance necessary for their type of business.