The Five Types of Insurance Your Business Needs
There are many kinds of insurance that businesses should look into to ensure they are protected in a variety of circumstances. The following are five types of policies that your business probably needs.
1. Liability Insurance
Every business should have general liability insurance. This will cover you if someone claims they or their property have been hurt or damaged as a result of your business. If someone falls at your place of business, for example, general liability insurance will help pay medical bills, etc.
There are additional types of liability that you may also want to consider, depending on the type of business you run. Product liability insurance is similar to general liability coverage, but it extends to the products that you sell, so if someone is injured as a result of using a product they purchased from you, this type of coverage can help with costs.
Professional liability insurance can protect professional service businesses. As The Hartford explains, “Let’s say your accounting firm makes a mistake on a customer’s financial statement and they have to pay a penalty. If they sue your business, professional liability insurance can help cover your legal costs. Investing in this coverage can help you save money in claims costs. This coverage is also known as errors and omissions insurance or E&O insurance.”
2. Workers Compensation Insurance
Businesses in every state, except for Texas, are required to have worker’s compensation (or “workers comp”) insurance. Even though it’s required, it’s also incredibly helpful for businesses. It pays benefits to employees who are injured as a result of their job, and it also prevents them from being able to sue the employer when such an incident occurs. Rules vary from state to state. In North Carolina, for example, there are about 600 classifications of employers, and rates depend on the classification of your company.
3. Commercial Property Insurance
Commercial property insurance protects you from damages to your place of business, as well as to the things your business requires to operate, such as equipment and inventory. It covers damage from weather incidents, as well as theft and vandalism. Even office supplies and business records are covered by this type of policy.
4. Business Interruption Insurance
Business interruption insurance can be used almost as a supplement to your commercial property insurance policy in the case that you need to shut down your business for a length of time as a result of some of the same types of occurrences. If your business property is damaged by weather or if you experienced a significant theft that requires you to shut down, a business interruption policy will help you offset the costs of not remaining open. You’ll need to pay close attention to the qualifying events covered in your policy.
5. Cyber Insurance
In this digital age, cyber insurance (or cyber liability insurance) may be considered a necessity for many businesses. With cyber threats, such as identity theft and ransomware, continually increasing, cyber insurance can save you money and hassle. A policy can help with costs from data breaches and other cyberattacks.
“Let’s say some private customer information gets leaked from your company’s database,” explains Lucy Lazarony at Forbes. “If the customer files a claim against your company, cyber liability insurance will help pay for the costs. Cyber liability insurance also will help pay for things such as notifying customers impacted by a data breach and offering them free credit monitoring.”
These are not the only types of business insurance available, but they are critical, and can keep your business from facing financial devastation as a result from unforeseen events, such as injuries, weather, and crime.