What are the Different Types of Business Insurance?

There are many types of business insurance available to business owners to protect them from various situations such as a natural disaster, theft, lawsuits, or damage that can cause an interruption in business operations. It is highly advisable for businesses to carry some type of insurance that at the bare minimum protects property. While different types of business insurance may be bought separately, they can also sometimes be purchased as a package, which may be more cost effective.

Property and Casualty Insurance

Property and casualty insurance is the most important insurance to have as a business owner. Property insurance insures the location of the business and casualty insurance insures the business, including the personal property of the business, such as equipment, machines, and supplies. Be sure to ask your insurance agent if your property and casualty insurance policy is broad or specific. Broad property and casualty insurance can cover an array of disasters, while a specific policy will only cover against one form of a disaster.

You may want to purchase additional types of casualty insurance as well. There are insurance policies available for cyber-fraud insurance, employee-theft, and identity theft. If you primarily do business online, check if your policies cover your website. If you depend on computers to run your business, it is a good idea to insure the computers in a separate policy.

A business insurance policy will usually include liability insurance, which can cover the loss to the business if the business or its employees are sued for negligence.

Product liability insurance is recommended for businesses that sell or manufacture products in the event that a customer is harmed by a mistake, or a design defect in your product.

State Business Insurance Requirements

Some types of business insurance are required by state law, be sure to check the state in which you wish to operate your business for state specific requirements.

If you have employees, you must either carry workers compensation insurance or contribute to a state fund depending on the location of your business. Having workers compensation insurance protects your employees if they are injured on the job. Some states will allow you to opt out of workers compensation if you are covered by private insurance.

Another type of required insurance is car insurance, if your business involves using any type of transportation. Personal auto insurance does not cover automobiles used for your business. If you have business automobiles it is imperative to get a commercial auto insurance policy to protect yourself.

Optional Business Insurance

There are other types of business insurance that can offer more than just the basic protection to the business owner. These types of business insurance can meet the needs of your specific type of business. 

Purchasing a group health insurance plan for your employees is a good way to attract and retain high-quality employees.

A business interruption policy will cover your lost income from the interruption of the business activities due to a disaster. This type of business insurance policy is complimentary to property and casualty insurance. While property and casualty insurance will cover the repairs or costs to the business in the aftermath of a disaster, business interruption insurance will cover your lost income from the interruption of the business activities.? 

Life or disability insurance for the owners or key employees may be a good idea as well. The owner can list his or her business as a beneficiary on the policy. This way, the business will be able to use the proceeds of the policy to buy out the share of the owner in the event that there is a disability or death.?

 You should contact an insurance agent to give you the best recommendations for your business needs. Be sure to have a list of everything your business does so that the insurance agent can customize and suggest policies that are appropriate for your business.