Launching and growing a business takes lots of hard work and determination. Without proper insurance coverage, however, a business risks being severely damaged or even destroyed when disaster strikes.
While the specific types of insurance you should consider depend on the type of business you operate, the different types of business insurance fall into these general categories:
Property Insurance: If your business owns and uses property in the course of conducting business, that property can be lost or destroyed through, for example, fire or theft. Property insurance protects not just buildings, but also the items used in conducting business operations, such as office furnishings, machinery, supplies and computers.
Liability Insurance: A business can be sued for causing third party bodily injury or property damage. Liability insurance pays damages up to the insured limits, as well as attorney’s fees and other costs associated with a legal defense. Liability insurance is also available to protect against other risks, such as lawsuits alleging libel or slander.
Business Auto Insurance: Business auto insurance covers vehicles owned by a business and used for business purposes, such as cars, trucks and vans. The coverage also pays the costs of third party bodily injury or property damage for which your business is legally responsible. If you or any of your employees use your own vehicles for business purposes, discuss with your agent whether your personal auto insurance policy will provide coverage if the vehicle is involved in an accident.
Workers’ Compensation Insurance: Workers’ comp insurance requirements are determined by state law. Most states require that a business with more than a stated number of employees purchase workers’ compensation insurance that pays the costs of an employee’s work-related injuries, as well as replaces a portion of wages lost due to injury or death in a work-related accident.
Business Owners Policy (BOP): A business owners policy or BOP is an insurance package that generally provides coverage insuring against property damage, business interruption and comprehensive general liability. It is generally more cost effective to purchase multiple coverages bundled into a single policy than to purchase them separately.
Life Insurance: Life insurance proceeds can be used to help reimburse a business for the loss of a key employee’s services at death. Life insurance can also be an effective way to fund a buy-sell agreement between multiple business owners, or to help surviving family members continue a business at the owner’s death.
Disability Insurance: Some states require businesses to provide some level of short-term disability benefits replacing a portion of an employee’s wages if the employee is sick or hurt and cannot work. On an optional basis, a business can also provide disability benefits for a longer duration, after the short-term benefits run out.
Our Protecting Your Business Life Guide is intended to help you evaluate the types of insurance coverage your specific type of business may need and to provide tips on managing premium costs. Contact my office for your free copy.