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What Are the Main Types of Business Insurance?

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 not only need to do your research on business insurance companies but also on the different types of insurance available. While you might not need to get every type 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 it’s a good idea to check their guidelines before taking out any insurance policies. 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 that of a construction company. 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 together a few types of coverage. 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 the industry you work in. It’s essential that you 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 with coverage. This insurance type 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.

The best small business insurance company owners should invest in is workers’ compensation. 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 simply hurting themselves using it, 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 reimbursed for their replacement or repair but nothing else.

Cyber Liability Insurance

This type of 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 that this type of insurance covers is the cost of 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 a large corporation’s, so you must find out which insurance types your specific scenario needs.

Contact us to speak to an insurance specialist at our Eatontown, NJ insurance agency. At Central Jersey Insurance Associates, we strive to provide you with the business, personal, health, and life coverage you need.