Business insurance protects you from the unexpected costs of running a business. Accidents, natural disasters, and lawsuits could run you out of business. Protect yourself with the right insurance.
Having a business insurance is an important way to reduce your risks in your business. It helps protect your:
- customers
- earnings
- employees
- business assets (such as equipment, premises and stock).
Your business may need certain types of insurance by law or because people you deal with need it. Other types of insurance are your choice.
Types of business insurance
The right insurance helps protect your business, customers and income. Understand the different types of business insurance and which ones your business needs.
Pick the type of business insurance you need
You get some protections from the kind of business structure you choose. A limited liability company (LLC) or a corporation status can protect your personal property from lawsuits. However, that protection has limits.
Unexpected catastrophe? Business insurance can fill in any gaps in coverage. This will make sure both your personal and business assets are fully protected..
You also may be legally required to purchase certain types of business insurance.
Business Insurance you need by law
By law, you may need some insurances to run your business. These depend on the type of business, but the most common are:
public liability insurance, which some states and territories need for certain occupations
workers compensation insurance, if you have employees
third party personal injury insurance, if your business uses motor vehicles. This is often part of your vehicle registration fee.
Some states also require additional insurance. Laws requiring insurance vary by state. Visit your state’s website to find out the requirements for your business.
Six common types of business insurance
After you purchase insurance that's required by law, you can find insurance to cover any other business risk. As a general rule, you should insure against things you wouldn’t be able to pay for on your own.
Speak to insurance agents to find out what kinds of coverage makes sense for your business. Then compare terms and prices to find the best deal for you. Here are six common kinds of business insurance to look for:
1. General liability insurance: Ideal for any business. This coverage protects against financial loss as the result of bodily injury, property damage, medical expenses, libel, slander, defending lawsuits, and settlement bonds or judgments.
2. Product liability insurance: Ideal for businesses that manufacture, wholesale, distribute, and retail a product. This coverage protects against financial loss as a result of a defective product that causes injury or bodily harm.
3. Professional liability insurance: Ideal for businesses that provide services to customers. This coverage protects against financial loss as a result of malpractice, errors, and negligence.
4. Commercial property insurance: Ideal for businesses with a significant amount of property and physical assets. This coverage protects your business against loss and damage to company property due to a wide variety of events. These include fire, smoke, wind and hailstorms, civil disobedience and vandalism.
5. Home-based business insurance: Ideal for businesses that are run out of the owner’s personal home. Coverage that’s added to homeowner’s insurance as a rider can offer protection for a small amount of business equipment and liability coverage for third-party injuries.
6. Business owner’s policy: Ideal for most small business owners, but especially home-based business owners. A business owner’s policy is an insurance package that combines all of the typical coverage options into one bundle. They simplify the insurance buying process and can save you money.
Four steps to buying business insurance
Assess your risks: Think about what kind of accidents, natural disasters, or lawsuits could damage your business. Is your business located in a commercial area that is at risk from seasonal events? Commercial property insurance will help protect against loss.
Find a reputable licensed agent: Commercial insurance agents can help you find policies that match your business needs. They receive commissions from insurance companies when they sell policies, so it's important to find a licensed agent that’s interested in your needs as much as his or her own.
Shop around: Prices and benefits can vary significantly. You should compare rates, terms, and benefits for insurance offers from several different agents.
Re-assess every year: As your business grows, so do your liabilities. If you have purchased or replaced equipment or expanded operations, contact your insurance agent. You should discuss any changes in your business and how they affect your coverage.