Some business ventures flop not because of the lack of management skills but because of the lack of insurance. Unanticipated disasters, both natural and man-made, as well as human and technical errors, can hamper business operations, imperil the business’ reputation, and jeopardize profits. If you omit your need for protection, one severe catastrophic event can wipe out your entire business at the drop of a hat.
With this, getting the right insurance for a wide range of possible mishaps should be one of the top priorities for business owners. Ahead are seven of the commonly required coverage every business would need.
1. General Liability Insurance (GL)
Every business, whether it’s commercial or home-based, must have a liability insurance for protection from a variety of liability claims. The coverage can protect you from claims including damage to property, personal injury, bodily injury to a third party and others which can arise from your business operations.
2. Professional Liability Insurance
Professional liability, also known as “errors and omissions” (E & O) insurance, covers a business against negligence claims resulting from mistakes or failure to perform professional services.
Each industry should have its own set of concerns which shall be addressed in a customized policy written for a particular business. This type of insurance covers professionals for their legal liability and is generally applicable for any service-providing individuals including lawyers, accountants, real estate agents, and insurance agents to name a few.
3. Product Liability Insurance
While the previous insurance type protects against claims of failure to perform professional services, this type of insurance guards against claims of personal injury or property damage caused by products sold or manufactured by your business.
Even if you’ve taken every drastic measure to guarantee your products’ safety and functionality, it’s still possible to find yourself named in a lawsuit due to charges caused your items. Product liability insurance works to guard your business in such a case, with coverage designed specifically for a particular type of product.
4. Property Insurance
Whether you own or lease a space for your business, purchasing a property insurance is a must. Your office equipment, computers, furniture, inventory, signage, and other business assets are at risk when events including fire, storms, vandalism, theft, and smoke damage take place. Property insurance is designed to protect your business in such disastrous cases. However, events like floods and earthquakes aren’t covered under the standard property insurance policies so make sure your area is not prone to these mass-destruction issues.
5. Auto Insurance
All road vehicles used for business, from the smallest motorcycles to massive trucks, must also be fully insured. Auto insurance has two functions; (1) it protects company vehicles, as well as the workers, products, and equipment they carry, against physical damage and bodily injury should an accident take place, and (2) it protects the company against any accountability that might arise from the collision.
6. Business Interruption Insurance
When a catastrophic event like a natural disaster occurs, the business operations will likely be paused, resulting to profit loss. This is where a business interruption insurance takes effect.
Business interruption insurance is caters to companies that require a physical location to do business, such as retail stores. It is designed to compensate a business for its financial loss during unfortunate events. It is one of the important parts of a Business Owner’s Policy (BOP) package, which covers all required coverage a business owner would need. Often, BOPs will include business interruption insurance, property insurance, vehicle coverage, and liability insurance.
7. Workers’ Compensation Insurance
When a pizza delivery guy, for example, suddenly meets a tragic vehicular accident during work hours, it’s always the accountability of the company. With this, purchasing workers’ compensation insurance is crucial as soon as you hire your first employee.
Workers’ compensation insurance works both ways for employees and employers. Firstly, it provides insurance to employees who are injured on the job. It covers wage replacement, medical treatment, disability benefits, and in some cases, death benefits. Secondly, it gives protection to businesses who might be subject to legal complications. In exchange for given medical benefits, the employee must agree not to sue the employer for the incident.
Carmina Natividad is a resident writer for Insurance Adviser, one of the largest and most credible general insurance businesses in Australia and New Zealand, providing high quality risk management advice for business owners. Being an enthusiast of pursuing financial security herself, she writes and shares self-help articles focused on finance and business.