No one ever wants to think about something bad happening to their business, but the fact is that accidents can and do happen. That's why it's important to have the proper insurance in place to protect your business in case of an emergency or business risk.
In this blog post, we will discuss the different types of business insurance that are available and what you need to know before purchasing coverage. This will help to protect your physical assets and business assets.
Why choosing the right insurance is so important
Choosing the right insurance for your business is critical, especially if you are a small business. The last thing you want is to be caught without the coverage you need in case of an emergency.
When it comes to business insurance, there are a few things you need to keep in mind:
Make sure you have the right coverage for your type of business
Review your policy regularly and update it as needed
Talk to an insurance agent to make sure you have the best coverage for your needs
Types of Insurance Policies to Consider
There are several different types of business insurance policies that you should consider, including:
General liability insurance (GLI)
Commercial Property Insurance
Business Interruption Insurance
Keyman insurance
Buy-sell agreements
Worker's compensation
Professional liability
Data Breach Insurance
Employment Practices Liability Insurance (EPLI)
Product Liability Insurance
Each of these policies has its own unique set of benefits and drawbacks, so it's important to understand what they cover before making a decision.
General liability insurance (GLI)
General liability insurance is a basic type of coverage that can protect your business from a wide range of potential risks, such as accidents, injuries, and property damage.
Having a GLI in place can help you avoid potentially costly lawsuits and protect your business's financial stability in the event of an accident.
GLI policies usually provide broad protection against various types of claims and can help you avoid costly legal expenses if something goes wrong.
A GLI policy usually covers the following:
Bodily injury or property damage to a third party
Personal and advertising injury
Medical expenses
Legal defense costs
Commercial Property Insurance
Commercial Property Insurance can help protect your business if its property is damaged or destroyed by a fire, theft, vandalism, or other covered events.
This type of policy can also help you cover the costs of repairing or replacing any property that's been damaged, as well as paying for any necessary temporary housing or storage expenses.
It should be worth noting that Commercial Property Insurance does not cover most natural disasters, such as earthquakes and floods, so you'll need to purchase a separate policy if you want coverage for those events.
Business Interruption Insurance
If your business is forced to temporarily close down due to a covered event, Business Interruption Insurance, also known as Business Income Insurance, can help you cover the costs of lost income.
This type of policy can also help pay for any additional expenses that your business may incur as a result of the closure, such as increased rent or storage costs for your inventory.
Since small businesses are the most vulnerable to changes and volatility in the markets, having this kind of insurance in place can be a real lifesaver.
Keyman Insurance
If you have key employees, it's important to have Keyman Insurance in place. This type of policy helps financially protect the business if that employee dies or becomes disabled.
If something happens to the owner or CEO of your company, Keyman insurance can help protect the business. This type of insurance pays out a lump sum if someone with key knowledge or skills in the company passes away or becomes disabled.
This is especially important if that employee holds a special role within the company and there is no one else who can fill their shoes.
Buy-Sell Agreements
If you're a business owner, it's important to have a Buy-Sell Agreement in place. This document helps protect your company if something happens to you or another owner.
It spells out the terms of what will happen to the business if one of the owners dies or leaves the company and how the proceeds from the sale of the business will be divided among the owners.
If you are in a partnership, you should also have a buy-sell agreement in place.
Worker's Compensation
If you have employees, it's important to have Worker's Compensation insurance in place. This policy helps protect your business if an employee is injured on the job.
It can help cover medical expenses and lost wages, among other things, as well as legal expenses if the employee decides to sue your company.
Make sure you are fully insured so that your business is protected in case of any accidents or injuries.
Professional Liability
Also known as errors and omissions (E&O) insurance, Professional Liability Insurance protects your business if someone files a lawsuit against you alleging that you made a mistake while providing professional services.
This could include things like negligence, malpractice, or errors and omissions.
It's important to have this type of insurance in case the unthinkable happens and you are sued for damages.
Business Owner's Policy
A Business Owner's Policy (BOP) is a package policy that combines property and liability insurance into one policy. This can be a great way to save money on your insurance premiums.
Generally, a BOP will provide coverage for your business property, including furniture, equipment, and inventory.
It will also provide liability insurance to protect you from any lawsuits that may be filed against you.
Commercial Auto Insurance
If you use a vehicle for business purposes, then you need commercial auto insurance. This type of policy covers accidents that occur while you are using the vehicle for business purposes.
This includes things like driving to and from client meetings, delivering products or services, or traveling to company events.
Data Breach Insurance
Data breaches are becoming more and more common. If your business is hacked, you could be held liable for the damages that occur.
Data breach insurance can help protect you from these costs.
This is particularly important if you plan to store customer data or credit card information, as the associated costs for a data breach, particularly one where you are found to be a fault, can be huge.
For example, the average cost of a data breach is now $148 per record and the average number of customer records kept per business is around 24,000. In the event of a full data breach, this could put you on the hook for just under $4 million.
Additionally, there is now a raft of legislation in place that could see you held liable for the actions of your employees when they cause a data breach and adds fines of up to $250,000 per incident.
Employment Practices Liability Insurance (EPLI)
If you have employees, then you need employment practices liability insurance. This policy covers costs associated with employee lawsuits.
This could include things like wrongful termination, sexual harassment, and discrimination claims.
EPLI can also help you cover the cost of defending yourself against such claims as well as any damages that are awarded.
Product Liability Insurance
If you produce, distribute or sell a product, then you need product liability insurance. This covers you in the event that someone is injured by your product. If you do have a product you want to bring to market, make sure you have product liability insurance in place first.
It can also help protect you if your product causes environmental damage. This type of policy is essential for any business that manufactures or sells a product.
Commercial Umbrella Insurance
If you want extra protection from catastrophic events, then you should consider commercial umbrella insurance. This type of policy kicks in after your other policies have been exhausted.
For example, if you are sued for $100,000 and have a liability limit of $500,000 on your general liability policy, the umbrella policy will cover the remaining $400,000. This type of policy is also a good idea for businesses that have high-value assets.
Finding the right policy for your company
There are many different types of business insurance out there, so it's important to do your research and find the right policy for your company.
If you are struggling to decide which policy is right for you, then talking to an accounting professional can be a good idea. MyAccountingCrew.com provides business insurance consultations to help business owners make the best decision for their company.
For more information, please visit our website or book a call with us today