Businesses face risks every day. The purpose of business insurance is to help companies protect their financial assets, physical property, and intellectual ideas. A business that does not have insurance may be unable to continue its operations after a loss occurs. Every business model and industry have its own risks, so companies need to tailor their insurance coverage to serve their needs. Before you decide which business insurance to buy, there are some facts you need to know beforehand.
What Does Business Insurance Cover?
There are different business insurance policy options that offer different types of coverage. Some of the most common types of business insurance cover the following:
- General Liability Insurance: this covers your business for claims that involve injury of the body, property damage mor medical expenses resulting from your products, services, or business operations.
- Professional Liability Insurance: this protects a business against mistakes and negligence related to the services it provides to clients. It is often used by service provides like lawyers, accountants, and physicians.
- Property Insurance: this covers loss, damage, or theft of your property and its contents that resulted from a fire, natural disaster, vandalism, and accidents.
- Workers Compensation: this covers employees if they get sick or inured at work.
- Loss of Income Insurance: this covers a business in case that an emergency occurs that causes the company to lose money. The insurance will help with expenses such as mortgage payments, payroll, and business taxes.
- Home-based Business Insurance: if your business is home-based, this insurance will cover your business equipment, supplies, and other work property kept in your home office.
- Data Breach Insurance: data breach can cost an average of $242 per breached record which can add up quickly. Companies can protect themselves from these costs with this type of insurance.
Steps for Buying Insurance
There are five steps that are involved in buying insurance.
- Educate yourself: it is critical that you have an understanding of the coverages described above. Try asking other business owners in your industry what insurance coverages they use.
- Analyze your business: you must have a detailed description of your business explaining what it does and how it operates.
- Choose an agent or broker: this person should understand the insurance coverages and must help you meet your insurance needs.
- Buy insurance: once you have chosen an agent or broker, they should be able to help you choose the right coverage for your business. Your agent can help you review and compare your options.
- Review your insurance regularly: your insurance policies need to reflect any changes that occur in your business. Meet with your agent or broker at least once a year and review it and make any changes if needed.
What Is the Cost of Business Insurance?
Depending on your location and type of business and what you want covered the costs can vary. For example, workers compensation insurance can be expensive if the industry you are in is high risk.
Reasons Why Business Insurance Is Important
Having business insurance is important because it protects your assets and you can keep your business operational in case of lawsuits or emergencies. The following are additional reasons why having business insurance is important.
It Is Required by Law
All businesses with employees need to have at least the following insurance:
- Workers compensation
- Unemployment insurance
- Disability insurance
Depending on your state and area you live, there are other legal requirements so be sure to look into that. If you fail to ensure your business in the proper way, it can lead to fines and in some cases criminal charges.
It Protects Against Lawsuits
You can be sued easily if you do not have the right business insurance coverage. Some ways companies can be sued are by customers who receive a faulty product, clients for a breach of contract, or employees who have an injury that occurred at work.
It Protects Your Staff
Having insurance to protect your team is an important asset a business should have. This can also help your business be protected by lawsuits.
It Makes You Credible
Your business looks more credible to clients, vendors, and employees by having insurance.
The Bottom Line
There is a lot to consider when buying insurance for your business so it is critical that you take the time to learn about the options you have available so you can choose the right one for you. Having insurance is a great way to stay protected so research the options available today.