With so
many different types of insurance to choose from, it can be overwhelming to determine
what type is best for your small business. Better Business Planning, Inc. is
here to help explain the types of insurance policies available and how they can
help protect you, your employees and your business’s bottom line.
Commercial
Property Insurance
In the case of a catastrophic event such as
a fire, explosion, burst pipe, storm or theft, commercial property insurance compensates
you for losses or damage to your building, leased or owned equipment, and other
property on the premises. In fact, commercial property insurance can cover
items such as furniture, inventory, computers and anything that would be
considered necessary for performing normal business operations.
Commercial property insurance is typically
purchased as a stand-alone policy or as part of a comprehensive business owner's
policy that includes property and general liability coverage. Commercial
property insurance is offered on either a replacement cost or actual cash value
basis.
·
Replacement cost:
Pays the cost to replace or repair the damaged property with materials of like
kind and quality, without any deduction for depreciation.
·
Actual cash value:
Pays the cost to repair or replace the damaged property, minus depreciation.
General Liability Insurance
General liability insurance policies typically
cover an organization for claims involving bodily injuries and property damage
resulting from its products, services or operations. What’s more, this form of
insurance can help cover medical expenses and attorney fees resulting from
bodily injury or property damage claims for which your organization may be
legally responsible.
General
liability insurance policies typically have four coverage elements:
Premises liability covers you in the
event that a person who is not employed at your business becomes injured on
your property. If someone sued your business because they tripped and fell on
your property, liability insurance can help cover those expenses.
Products liability covers you if a
product or service causes injury to someone’s body or inflicts damage on a
consumer’s personal property. If you’re a tech company that broke a customer’s
computer while performing a service on it, those damages could be covered.
A
personal injury is when your business inflicts a physical, financial or
mental injury to a third party. For instance, let’s say you take action in
detaining someone who you had reason to believe was stealing from your store.
If it turns out your accusations are false and the person decides to sue you,
you’d be covered under your general liability policy.
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injuries are caused by alleged misinformation, copyright infringement or
slander made by your company. If you were advertising a product that claimed it
could help clear acne and it ended up making a consumer’s acne worse, that could
be considered an advertisement injury.
Overall, a
general liability policy is beneficial for covering any medical bills or legal
costs that accrue if the injured third party decides to sue your business.
Employment Practices Liability
Employment practices liability
insurance (EPLI) is a form of insurance that covers wrongful acts that occur
during the employment process. The most frequent types
of claims covered under an EPLI policy include claims of discrimination, wrongful termination, sexual harassment and retaliation.
These policies will reimburse your
company against the costs of defending a lawsuit in court, and for judgments
and settlements. EPLI covers legal costs, whether your company wins or loses
the suit. However, these policies typically do not pay for punitive damages, or
civil or criminal fines.
Workers’ Compensation
Workers’
compensation is important in the event that an employee suffers a work-related
injury or illness. This type of insurance is required in most states and is
used to cover medical bills or wage replacement for employees who experience a
work-related injury.
For
example, if a worker pulled a back muscle at work and was unable to perform their
duties, workers’ compensation would help in covering any physical therapy costs
as well as compensating the employee for any lost wages.
Having
worker’s compensation insurance can also protect your business from civil suits
made by employees against your company related to their injuries.
Cyber
Liability Insurance
If any part of your business is on an
online platform, it is crucial to obtain cyber liability insurance. This type
of coverage can protect your business from a cyber attack or interruption that
can cause a loss in data, revenue and the trust between you and your customers.
Cyber liability insurance is not only there to protect the internal information
of your company, such as employees’ social security or financial information,
but it also protects your customers' personal and banking information.
Most cyber liability policies include
both first- and third-party coverage:
·
First-party coverage is for the business itself— helping the
business recover from any losses after a cyber attack.
·
Third-party coverage is to cover claims by people who have been
injured because of your business being hacked.
Restoring compromised or lost data can be very costly, so cyber
liability insurance is there to help cover financial losses to your business
and the costs of claims made against your company by clients or other third
parties who were affected.
Commercial
Auto
Commercial
auto insurance helps cover the costs of an auto accident if you or an employee
is at fault. This coverage can help pay for damaged property and medical
expenses.
- Your business should consider a commercial auto policy if any of the following are true:
- · Your business owns, leases or rents vehicles such as cars, trucks or vans.
- · Your business has employees who drive their own vehicles to conduct business.
- · Your business has employees who operate leased, rented or owned company vehicles.
Professional
Liability Insurance
Professional
liability insurance, also known as errors and omissions (E&O) insurance, can
protect your business against claims that a service you provided caused a
client to suffer due to a mistake on your part or because you failed to perform
a service.
Professional
liability insurance can cover the cost of defending your business in a civil
lawsuit for an alleged error or omission. What’s more, depending on your
industry, professional liability insurance may be required by law.
While many
types of businesses need professional liability insurance, you should
especially consider this type of insurance if your business works directly with
customers while providing services.
More Information
Contact
Better Business Planning, Inc. to help you analyze your needs and decide on the
right coverage for you and your growing business.
Source: Zywave, 2019.
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