What Type of Insurance Does Your Business Really Need?
With very few exceptions, every business needs insurance coverage of one kind or another. No amount of preparation can prevent everyone from slipping and falling in your business. You can’t predict with certainty that no one will sue you for an ad they claim copied their ad.
Of course, there are many business insurance types that you can choose from for your business. That may leave you asking: “What insurance does my business need?”
If you need help choosing insurance, keep reading for an overview of common insurance types.
General Liability Insurance
Almost every business carries general liability insurance. It’s one of the most common types of business insurance. It covers your business from common hazards of running a business, such as:
- Customer injury
- 3rd party property damage
- Libel or slander lawsuits
- Advertising lawsuits
General liability insurance only covers damages to third parties, not to your business property.
Commercial Property Insurance
Commercial property insurance provides coverage for your business property. For example, this type of insurance covers repairs if an accidental fire damages your business property. It would also provide coverage for losses during a break-in.
This is a standard policy for most businesses.
Business Income Insurance
Business income insurance replaces lost income after certain kinds of disasters. It offers coverage after, for example, a fire or a break-in that deprives you of key equipment. This insurance helps keep the business solvent until you can reopen.
This type of policy is less common but advisable for all businesses.
Business Owner’s Policy
A business owner’s policy folds together several kinds of policies. You get general liability, commercial property, and business income in a single policy.
Small businesses often opt for this bundle to reduce insurance costs and simplify their insurance. BOPs may provide less standard coverage than individual policies.
Many state governments mandate that businesses with employees carry certain kinds of insurance, such as:
- Workers’ compensation insurance
- Unemployment insurance
- Disability insurance
These policies cover employees who get injured on the job, laid off, or disabled on the job. They typically provide temporary wage replacement, medical coverage, or both.
Certain kinds of businesses need specialized insurance. Restaurants, for example, will often carry temperature change insurance. A temperature change policy covers losses from a refrigerator failure.
Businesses with difficult to insure problems may form a captive insurance company. These companies provide specific business insurance coverage for those problems.
Picking Between the Business Insurance Types
Picking between the business insurance types can prove a challenge, especially for new business owners.
If you run a true small business with only a few employees, a business owner’s policy is always a safe bet. If your business owns a lot of expensive and critical equipment, you may want a commercial property policy with extra coverage.
If you deal with dangerous materials or equipment, a robust standalone general liability policy may make sense for you.
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