Running a small business can be a rewarding experience, but it can also come with risks. As many small business owners and budding entrepreneurs come to learn, unexpected accidents and emergencies can happen at any time. Having the right insurance in place can offer peace of mind so business owners can focus on managing their organization. That's where business insurance comes into the picture.
What is business insurance for?
Depending on the type of coverage purchased, business insurance generally helps protect businesses from financial losses due to certain covered events, which may be unexpected. Depending on the business's unique needs, the following are some common business policy types to consider:
Commercial General Liability Insurance (CGL)
Commercial general liability policies help protect business owners against financial liability arising from certain third-party claims. While the terms, conditions and exclusion will vary, a CGL policy generally covers third party bodily injury and property damage claims and may also cover claims related to slander and libel. CGL policies typically do not cover damages to the business’s own property or bodily injury suffered by the business owner or its employees. Business owners may also want to consider product liability insurance coverage.
Commercial Property Insurance
Commercial property insurance is a type of insurance designed to help business owners protect the value of a covered building and its contents (such as furniture and equipment) and exterior fixtures features (such as fences) against covered losses. While the terms, conditions and exclusions of each policy will vary, a commercial property insurance policy will typically cover losses resulting from certain events including, for example, fires, windstorms and vandalism. A business owner can obtain a standalone commercial property insurance; however, commercial property insurance coverage is also available under a Business Owner’s Policy, discussed below.
Two additional property-related options to consider include:
- Business Personal Property Insurance: Business personal property insurance helps provide coverage for a business’s personal property at a scheduled office, building, or location.
- Inland Marine Insurance: Inland marine insurance helps provide coverage for a business’s material, products, or equipment that moves or is transportable.
Business Owner's Policy
Small business owners may have varying needs when it comes to insurance. For this reason, business owners may consider combining different coverages under a single business owner's policy, also called a BOP. A business owner’s policy typically combines commercial general liability coverage with commercial property coverage. Obtaining a BOP can help reduce costs and may simplify the buying process.
Workers’ Compensation Insurance
Commercial general liability insurance typically does not cover an employee’s employment-related bodily injury or illness. For that reason, business owners may want to consider workers' compensation insurance. Workers’ compensation insurance provides coverage for employees who are sick or injured as a result of their employment. This type of coverage may be required by state laws so it is important to understand the workers’ compensation laws in the state where the business resides.
Commercial Auto Insurance
Commercial auto insurance helps provide coverage for vehicles owned by the business. Coverage options may include, for example, collision, liability, comprehensive, personal injury, medical payments, and uninsured/underinsured motorist.
Errors and Omissions Insurance (E&O)
Errors and omissions insurance, also referred to as professional liability insurance, can help provide financial protection for companies and professionals if a client alleges their work is inadequate or they committed a negligent act in the course of providing professional services. If a company provides services to customers, there may be higher risk of being subjected to these types of claims.
Product Liability Insurance
Product liability insurance can help businesses protect against losses from claims alleging that a product they manufactured or sold caused bodily injury, property damage, financial loss, death, or other damages. While the terms and conditions of each policy will vary, product liability insurance policies typically cover legal expenses and damages resulting from such claims. Consider how a business's products might impose a risk on consumers and whether investing in this type of coverage makes sense. Product liability coverage can be provided as an endorsement to a business’s Commercial General Liability policy or purchased as a standalone option.
Home-Based Business Insurance Coverage
Not all businesses operate out of commercial property. Smaller companies and startups may begin out of people's living rooms. While a homeowners policy may help protect the home, it may not provide adequate coverage to help protect a home-based business. For these sorts of companies, there are home-based business coverage options that may be purchased in addition to a standard homeowner's insurance policy.
What Is Business Insurance?
Business insurance can help protect businesses from certain losses and liabilities that may arise when running a business. With risks possible in so many areas of the business world, obtaining the right insurance for the particular needs of a business can be a powerful risk management tool, helping to navigate what could otherwise be a challenging situation.
In addition to the various insurance coverage options which may be available, the following are other business-related considerations to think about:
- Employee benefits
- Cyber services and cyber insurance
- Real estate services
- Directors & officers coverage/entity liability
- Fiduciary liability
- Employment practices liability
- Crime liability
Helping to protect a business against risks can be essential for long-term success. Contact the Acrisure team today for help with your insurance questions, or request a small business insurance quote now.