5 Types of Business Insurance for Your Particular Needs
When business assets are not insured, a loss due to accidents or litigation can wipe out months or years of hard work, along with future earning potential. Business insurance was created to protect companies against these risks. Choosing the right insurance for your company usually falls under these five types.
1. Umbrella Policy
This is an added policy to provide additional coverage of risks that other standard policies won’t cover, or to provide benefits beyond other policy limits. Umbrella policies are usually affordable, but may require maintaining maximum coverage on standard policies.
Property insurance covers a business owner’s physical assets, or property. This can include structures, equipment, tools, merchandise, office furniture, and more. In the event of a fire, accident, or theft, property essential to conducting business may be a total loss, and could put the company out of business if not replaced. Natural disasters like earthquakes or floods may not be covered, depending on the area and the particular insurer.
3. Workers’ Compensation
Most state laws require that workers are covered against financial loss if they’re injured while working for you. Falls, burns, repetitive strain injuries, chemical fumes, and so on could result in physical harm that prevents them from earning a living. Workers’ compensation generally covers medical costs, loss of wages, and even death benefits if the worst happens. Insurers can provide policies that help cover these obligations.
4. Vehicle Insurance
As every private vehicle requires insurance to cover damage against others, so do company vehicles. This may be a blanket policy to a fleet of commercial vehicles, or to specific vehicles, such as separate policies for delivery trucks and maintenance vans. It may also be required to cover privately-owned vehicles for workers who use their own car on the job to deliver goods or provide a service.
This type of insurance covers businesses against lawsuits from injured parties. There is no single liability policy that will fit all businesses. Professional liability insurance, for instance, protects a business owner from claims that result in harm due to negligent services, such as mistakes or sub-standard performance. Product liability insurance protects companies where harm has come to customers through faults in their product, such as toxic materials. General liability policies may not cover specific situations where these other types are more suitable. It’s important to discuss liability insurance with your insurance provider.
Proof of Insurance
This involves a document known as a certificate of insurance issued by the insurer. This generally applies to liability insurance, which may be required, for example, when bidding on contract work for the state or federal government. It tells the client what type of insurance coverage you have, the effective dates, and how much monetary value it provides. Usually, the client requests your certificate directly from your insurer. Some brokers handle this for third parties as a service, which is very useful when the contract process is legally complex, involves foreign interests, or poses a unique set of circumstances.
Selecting the right policy to protect your business interests can be difficult. It’s important to ask questions such as:
* is the insurance company experienced and reliable?
* Do they offer the necessary coverage at the right price?
* Will they be able to grow and adapt your policies as business needs change?
Every company should have property and liability insurance, at the least. Be sure to request a full explanation of the liability coverage provided and how it protects your particular type of business. If you aren’t satisfied with the answers, then you might be throwing away money on inadequate or useless coverage that puts your business future at risk.