It can be overwhelming to chose what type of insurance is best for your business. Let us help explain the types of insurance policies available. We’ll also explain how they can help protect you, your employees, and your bottom line.
1. Commercial Property Insurance
Starting with the first of the seven insurance policies, we have commercial property insurance. In the event of a fire, explosion, burst pipe, storm, or theft, this insurance compensates you for losses or damage. This can be to your building, leased or owned equipment, and other property on the premises. This insurance covers items such as furniture, inventory, computers, and anything that would be considered necessary for performing normal business operations.
This insurance is typically purchased as a stand-alone policy or as part of a comprehensive business owner’s policy. It includes property and general liability coverage. Commercial property insurance is offered on either a replacement cost or actual cash value basis.
- Replacement cost: Pays the cost to replace or repair the damaged property with materials of like kind and quality, without any deduction for depreciation.
- Actual cash value: Pays the cost to repair or replace the damaged property, minus depreciation.
2. General Liability Insurance
These policies typically cover an organization for claims involving bodily injuries and property damage resulting from its products, services, or operations. What’s more, this form of insurance can help cover medical expenses and attorney fees resulting from bodily injury or property damage claims for which your organization may be legally responsible.
General liability insurance policies typically have four coverage elements:
Premises liability covers if a person who is not employed at your business becomes injured on your property. If someone sued your business because they tripped and fell on your property, liability insurance can help cover those expenses.
Products liability covers if a product or service causes injury to someone’s body or inflicts damage on a consumer’s personal property. If you’re a tech company that broke a customer’s computer while performing a service on it, those damages could be covered.
A personal injury is when your business inflicts a physical, financial, or mental injury to a third party. Let’s say you take action in detaining someone who you had reason to believe was stealing from your store. If it turns out your accusations are false and the person decides to sue you, you’d be covered under your general liability policy.
Advertisement injuries are caused by alleged misinformation, copyright infringement, or slander made by your company. If you were advertising a product that claimed it could help clear acne and it ended up making a consumer’s acne worse, that could be considered an advertisement injury.
Overall, a general liability policy is beneficial for covering any medical bills or legal costs that accrue if the injured third party decides to sue your business.
3. Employment Practices Liability Insurance
(EPLI) is a form of insurance that covers wrongful acts that occur during the employment process. The most frequent types of claims covered under an EPLI policy include claims of discrimination, wrongful termination, sexual harassment, and retaliation.
These policies will reimburse your company against the costs of defending a lawsuit in court, and for judgments and settlements. EPLI covers legal costs, whether your company wins or loses the suit. However, these policies typically do not pay for punitive damages or civil or criminal fines.
4. Workers’ Compensation
This policy is important if an employee suffers a work-related injury or illness. It is required in most states and is used to cover medical bills or wage replacement for employees who experience a work-related injury.
For example, if a worker pulled a back muscle at work and was unable to perform their duties, workers’ compensation would help in covering any physical therapy costs as well as compensating the employee for any lost wages.
Having worker’s compensation insurance can also protect your business from civil suits made by employees against your company related to their injuries.
5. Cyber Liability Insurance
If any part of your business is on an online platform, it is crucial to obtain cyber liability insurance. It protects your business from a cyber attack or interruption that can cause a loss in data, revenue, and trust. This coverage is not only there to protect the internal information of your company, but it also protects your customers’ personal and banking information.
Most cyber liability policies include both first- and third-party coverage:
- First-party coverage is for the business itself— helping the business recover from any losses after a cyber attack.
- Third-party coverage is to cover claims by people who have been injured due to your business being hacked.
Getting your lost data back can be very costly. Cyber liability insurance is there to help cover financial losses to your business and the costs of claims made.
6. Commercial Auto
Commercial auto insurance helps cover the costs of an auto accident if you or an employee is at fault. This coverage can help pay for damaged property and medical expenses.
Your business should consider a commercial auto policy if any of the following are true:
- Your business owns, leases, or rents vehicles such as cars, trucks, or vans.
- You have employees who drive their vehicles to conduct business.
- Lastly, you have employees who operate leased, rented or owned company vehicles.
7. Professional Liability Insurance
Also known as errors and omissions (E&O) insurance, can protect your business against claims that a service you provided caused a client to suffer due to a mistake on your part or because you failed to perform a service.
It can also cover the cost of defending your business in a civil lawsuit for an alleged error or omission. Depending on your industry, professional liability insurance may be required by law.
If you work directly with customers while providing services you should especially consider this type of insurance.