Key Takeaways

• Business insurance protects your company from financial loss due to unforeseen events, including accidents, property damage, and liability claims.
• The main types of business insurance include general liability, property insurance, workers’ compensation, and professional liability insurance.
• General liability insurance covers third-party claims for bodily injury, property damage, and advertising injury, safeguarding your business from legal costs.
• Workers’ compensation insurance covers employee injuries or illnesses, ensuring your business complies with legal requirements and helps protect employee well-being.

The American Insurance industry contributes 3.1% of the country’s total GDP. Dealing with insurance can be time-consuming, especially if your business is new. Knowing what you should look for isn’t as evident as it might seem initially.

When it comes to insurance, you need to research not only business insurance companies but also the different types of insurance available. While you might not need every kind of insurance, some types, like liability insurance, can’t be skipped.

Keep reading to find out more about the main types of business insurance.

How Much Business Insurance Do You Need?

Your state will determine your basic insurance requirements, so checking their guidelines before taking out any insurance policies is a good idea. Commonly, workers’ compensation, unemployment, and disability insurance are required, but this might not be enough. Business insurance packages often cover the following:

• Business Owners Policies (BOP)
• Workers’ Compensation
• General Liability
• Errors & Omissions
• Commercial Auto
• Commercial Property
• Group Benefits
• Professional Liability

Once again, your industry and the type of business you run will determine what you need. Insurance for a software company will look vastly different than a construction company’s. So it’s a good idea to sit down with a few business insurance companies to discuss your needs and how much it will cost.

Business Owner’s Policy (BOP)

BOP is a type of insurance that packages a few types of coverage together. Generally, this combines general liability, property damage, and workers’ compensation, but it all depends on the insurance company.

This type of insurance offers you broad coverage and might be all you need, depending on your industry. You must hash out precisely what is and isn’t covered with this type of policy and when you can put claims in. This will help you decide if you need additional insurance coverage or not.

General Liability Insurance

When running a business, business liability insurance protects you from business-operations-related claims. If you have the right insurance and someone is injured while on your business property or if you damage someone’s property, you can rest assured that you have the necessary coverage to protect yourself.

Note that any business that deals directly with customers needs general liability coverage. This is because it protects you from customers suing you for bodily injury by paying the damages and covering your legal fees. You’ll also be protected from libel and slander claims as well.

Workers’ Compensation Insurance

While general liability insurance covers you if a customer is injured on your property, workers’ compensation provides your employees coverage. This insurance covers medical expenses and lost wages if an employee is injured while working.

Depending on the situation, it can also cover the cost of your legal defense if the employee sues you.

Workers ‘ compensation is the best small business insurance company owners should invest in. It’s mandatory in every state except Texas. The only other exception is if there aren’t any non-owner employees.

Product Liability Insurance

If you sell products, you need to consider product liability insurance. This insurance covers you from claims that arise from the products you sell.

If there is property damage due to the product, or it results in an injury, then this type of insurance will cover the cost of your defense and awarded damages.

This covers a whole range of incidents. From people having allergic reactions to your product and needing to go to the hospital to hurt themselves using it simply, this type of insurance covers your legal costs.

Commercial Property Insurance

This type of insurance is beneficial to all businesses. Commercial property insurance protects your business assets from damage or theft. If your assets are damaged or stolen, your insurance will reimburse you for the cost of repairs or replacement and lost income due to the assets not being in use.

This ranges from software companies being reimbursed for stolen computers to buying new office furniture after a fire. The main benefit of opting for commercial property insurance, instead of just insuring the items, is that you’ll get reimbursed for the lost income. If you insure the items, you will be refunded for their replacement or repair but nothing else.

Cyber Liability Insurance

Cyber liability insurance is geared towards businesses that digitally store customer data. Cyber liability insurance protects you from damage or injury due to a data breach.

If a hacker targets your company and steals your customer’s data, this type of insurance covers the cost of your defense and any damages awarded. The insurance also covers any PR costs that you incur due to cybercrime. Generally, you’ll need to work to repair your reputation while also monitoring for affected customers.

The most considerable expense this type of insurance covers is the legal expenses if you’re sued because of the leaked data. These incidents can lead to drawn-out court cases, and affected customers can receive big payouts.

The Main Types of Business Insurance Explained

Regarding business insurance, you must ensure your business is completely covered. Small business insurance will look different from large corporations, so you must determine which insurance types your specific scenario needs.

FAQs

1. What does general liability insurance cover for businesses?

General liability insurance covers bodily injury, property damage, and advertising injury claims that may arise during business operations or marketing activities.

2. Do I need workers’ compensation insurance for my business?

Yes, if you have employees, most states require you to carry workers’ compensation insurance to cover medical expenses and lost wages for work-related injuries or illnesses.

3. What is the difference between professional liability and general liability insurance?

Professional liability insurance covers errors or negligence related to your services, while general liability insurance covers accidents and injuries during business activities.