Understanding the different business insurance types is critical to protecting your business from unforeseen, accidental allegations – claims that could cripple your company if ignored. In the content below, we provide a basic guide to the different business insurance types, providing insight to business owners.
General Liability Insurance (GL)
Liability insurance is critical for every business, even startups and home-based companies. In essence, liability insurance protects you against damage caused (or supposedly caused) to a third party by your products, services, or employees. Liability claims can include bodily injury, property damage, libel, and slander.
Small business owners often wonder if general liability insurance is worth it, especially when accidental damage seems unlikely. The answer is absolutely – general liability insurance will protect your small enterprise from significant liability claims. Furthermore, although accidental damage may seem unlikely, issues often arise from commonplace business situations, including:
- Client representation
- Face to face client interaction
- Working on or with a third party’s property
- Using third-party locations for business activities
- Business advertisement
- Working with clients who require a certificate of insurance
Business professionals agree that general liability insurance is unquestionably important.
Property insurance is a worthwhile investment for companies with a building or any business property that should be protected, including tools, computers, office equipment, equipment, furniture, etc. Damage to these products could occur from theft, vandalism, severe storm weather, or fire, to name a few. Certain insurance plans will cover the cost of repair or replacement in the event of product damage.
While every business benefits from property insurance, home-based companies should especially take this policy seriously, as “business property” and “personal property” are often the same.
Auto insurance can be purchased with a variety of specifications, as your business needs. For example, commercial auto insurance protects company vehicles, including transportation that carries products, equipment, or staff members. Commercial insurance protects work vehicles from damage.
Non-owned auto insurance should be considered if your staff members drive personal vehicles but do not have access to adequate insurance coverage. Additionally, if an employee is being compensated for delivering goods or services, auto insurance is necessary to cover damages in the event of an emergency.
One business insurance provider describes a few circumstances in which commercial auto insurance would protect a business owner and his/ her company:
- An employee hits a pedestrian while driving one of the business vehicles. The pedestrian requires medical treatment that results in large medical bills.
- You swerve off the road while driving to work in a company vehicle and take out a residential mailbox.
- An employee driving to work in a company vehicle hits another car and totals it.
As soon as you hire your first employee, you should purchase worker’s compensation insurance – even if your staff will be performing low-risk tasks. Similar to general liability insurance, worker’s compensation is a safety net in the event of a medical condition or slip-and-fall injury that could otherwise result in an expensive claim.
Worker’s compensation benefits both you and your employees. Employees on worker’s comp forfeit the right to sue you in the event of an injury while working but receive benefits (including medical treatment coverage, disability advantages, and death benefits) if such an emergency occurs.
Professional Liability Insurance
Also known as Errors and Omissions Insurance, a professional liability insurance policy will protect your company in the event of improperly rendered services (e.g. negligence claims, misrepresentation, false advice). Although the name sounds similar, general liability insurance does not cover these damages. Work with a professional insurance provider to learn how your specific industry should address the policy. Every company – from hair salons and lawyers to real estate agents – will require unique coverage for an individualized set of concerns.
As with many different business insurance types, pursuing the policy is important, even if you assume your company has no room for error. Even if your business did nothing wrong, a client or customer can sue if they believe you made a mistake. Insurance protects your company from paying costly legal defense fees.
Data Breach Insurance
Data breach insurance is critical for businesses storing sensitive information on computers, servers, or files, including – but not limited to – confidential data about employees and customers. For example, if you have social security numbers, banking information, healthcare materials, etc., a data breach insurance policy will protect your company against a security breach.
To defend against identity theft and fraud for businesses storing or using personal information, Massachusetts companies are required to purchase cyber insurance or “data-breach liability insurance.” Additionally, any Massachusetts company must create a comprehensive written information security program (WISP) in accordance with Massachusetts law.
Product Liability Insurance
A product liability insurance policy is essential if your business manufacturers products saleable on the general market. If your company sells products to the public, you are likely working to make your goods as safe as possible. However, mistakes can be made, and any company is liable to being named in a lawsuit due to an incident caused by an associated product.
Business Owner’s Policy (BOP)
Many entrepreneurs and small business owners begin the pursuit of adequate insurance coverage by purchasing a BOP package. Altered based on company needs, a BOP is a basic collection of critical business insurances, such as vehicle insurance, property insurance, and liability insurance. Choosing a BOP, as opposed to purchasing every insurance policy separately, can be cost-effective. Once again, work with a provider to bundle the proper insurances needed for your specific company.
Remote Quality Bookkeeping
We listed eight different business insurance types, but the list could go on! Navigating the complexities of insurance requires an expert.
At Remote Quality Bookkeeping, we know that insurance is only one of the many complexities associated with proper business ownership! Our team of financial professionals work to provide cost-effective, efficient, and accurate bookkeeping service for small business and franchises through the United States, allowing business owners like yourself to focus on what’s most important: your business.
To inquire about our services, feel free to reach out at 866.567.4258 or fill out our online contact form. A team member will get in touch shortly!