Business owners need business insurance. Most states require business owners to at least havegeneral liability insurance. But you can’t just walk into an insurance agency and say, “I’d like onebusiness insurance, please!” That’s because there are almost as many types of business insurance as there are types of businesses, and one size does not fit all.
What is business insurance?
Business insurance is an umbrella term for a range of insurance types that cover financial losses to your business. Depending on the policy,business insurancecan cover anything from property damage to legal liability to medical expenses, and more.
What type of business insurance is right for your business?
There are eight main types of business insurance:
1.General liability insurance
2.Workers’ compensation insurance
3.Commercial property insurance
4.Professional liability insurance
5.Commercial auto insurance
6.Product liability insurance
7.Business owner’s policy (BOP)
8.Cyber liability insurance
Let’s take a closer look at each one.
1. General liability insurance
General liability insurance protects you from business-operations-related claims. If someone is injured on your business’s property, or if you damage someone’s property, this insurance covers the cost of your defense and any damages that are awarded. Any business that works directly with customers needsgeneral liability coverage.
For example, let’s say you own a retail store. A customer slips and falls in your lobby and breaks their arm. They sue you for bodily injury, and the court awards them $100,000 in damages. If you have general liability insurance, your insurer will pay the damages and cover your legal fees.
Most policies protect your business from libel and slander claims as well.
2. Workers’ compensation insurance
Workers’ compensation insurance, or “workers’ comp” for short, provides coverage for medical expenses and lost wages if an employee is injured while working. In some cases, it also covers the cost of your legal defense if the employee sues you. Sometimes disability insurance is included with workers’ comp.
For example, let’s say you own a small clothing line. If one of your employees is injured while sewing, yourworkers’ compensation insurance将cover the cost of their medical treatment and lost wages.
Any business with employees needs workers’ compensation insurance. It’s mandatory in every state, except Texas, for businesses with non-owner employees. Four states even require you purchase a policy from the state, not a private carrier.
3. Commercial property insurance
This type of business insurance protects your business assets from damage or theft. If your office is damaged by a fire, or if your computer equipment is stolen, this insurance will reimburse you for the cost of repairs or replacement, as well as lost income. Any business with physical assets needscommercial property insurance.
例如,假设您自己的会计师事务所and your office is burglarized. The thieves steal your computer, printer, and office furniture. If you have commercial property insurance, your insurer will reimburse the cost of repairs or replacement, as well as for the income you lost while your team couldn’t work because of the missing equipment.
4. Professional liability insurance
Also known as errors and omissions, this type of insurance protects businesses from the cost of damages or injuries that occur as a result of professional services provided by the business. If you provide a service to your clients, and they claim you did not do the job right and your mistake led to a loss on their part, this insurance covers the cost of your defense and any damages awarded.
For example, let's say you're an architect. You design a house for a client, and they claim the roof leaked during the first storm because your design was bad. If they sue you, yourprofessional liability insurance将cover your legal expenses and any damages awarded.
5. Commercial auto insurance
Commercial auto insurance protects your business from the cost of damages or injuries that occur while you use a vehicle for business purposes. If you or one of your employees is involved in an accident, this insurance will cover the cost of repairs or replacement for the vehicle, as well as any medical expenses and lost wages. Any business with vehicles needs commercial auto insurance.
For example, let’s say you own a food truck and you’re involved in an accident. Your commercial auto insurance will cover the cost of repairs or replacement for your truck, as well as any medical expenses and lost wages.
6. Product liability insurance
Product liability insurance protects you from claims that arise from the products you sell. If a customer claims your product caused them injury or damaged their property, this insurance will cover the cost of your defense and any damages awarded.
For example, let's say you sell a cleaning product that gives someone a severe allergic reaction that results in hospitalization. If the customer sues you, yourproduct liability insurance将cover your legal expenses and any damages awarded.
7. Business owner’s policy
Abusiness owner’s policy (BOP)is a type of business insurance that bundles together different types of coverage. The most common types of coverage included in a BOP are general liability, property damage,business interruption, and workers’ compensation.
For example, let’s say yoursmall businessis an ice cream shop. Your business is burglarized and your cash register is stolen. You are forced to close for two weeks while repairs are being made. If you have a business owner’s policy, your insurer will reimburse you for the cost of lost business, as well as the cost of repairs or replacement for your office equipment.
8. Cyber liability insurance
Cyber liability insurance protects you from the cost of damages or injuries that occur as a result of a data breach. If your business is hacked and customer data is stolen, this insurance will cover the cost of your defense and any damages awarded. It also covers the cost of anypublic relations (PR)needed to repair your reputation, as well as credit monitoring for your affected customers.
For example, let’s say your store’s customer database is hacked, revealing the names, addresses, and credit card numbers of your customers. Cyber liability insurance would compensate them in case of a claim, and pay for free credit monitoring for affected customers. It would also pay for your legal expenses.
Any business that digitally stores customer data needs cyber liability insurance.
如何选择哪些业务insurance is right for you
When choosing abusiness insurancepolicy, it’s important to pick one that covers all of your risks. You should also consider the deductible (the amount of money you would have to pay out of -pocket before your insurance kicks in). A higher deductible can mean lower premiums, but it also means more risk for your business.
Your business insurance needs will depend on the size and type of business you have, as well as the industry you are in. If you’re not sure what coverage you need, speak to a business insurance agent or broker. They can assess your risks and help you choose the right policy for your business.
Takeaway
No business is immune to risk, but you can protect your business with the right insurance policies. By understanding the types of business insurance available, you can make sure your business is properly covered in the event of an accident or disaster.
Choosing business insurance FAQ
What are the common types of business insurance?
Common types of business insurance are general liability, workers’ compensation, commercial property, professional liability, commercial auto, product liability, business owner’s policy, and cyber liability.
Why do you need business insurance?
You need business insurance to cover the costs of an unexpected event, like injury, fire, theft, or vandalism.
How is business insurance calculated?
Business insurance premiums are calculated based on the type of business you have, how many past claims you’ve filed, where your business is located, how many employees you have, your annual revenue, and other factors.