Are you taking the leap into building your own empire, or hoping to transform your passion project into a reliable source of income? Maybe you’re already well on track and looking for some extra guidance on managing your risk. Either way, knowing the ins and outs of business insurance is vital for all entrepreneurs
We get it — it’s hard thinking about harmful events or incidents that could affect your business, but the reality is that sometimes these events happen. But it doesn’t have to be so harmful if you’re well-prepared.
As notoriously complicated as the insurance space can be, having coverage gives you much-needed financial guardrails and peace of mind that your assets, clients’ employees, and equipment are protected.
We’re here to take the guesswork out of business insurance — whether you have 1 or 100 customers, this one’s for you!
The main types of business insurance
So, here’s the thing about insurance; it’s not one size fits all. There are many different types of coverage, all designed to add layers of protection for each diverse area of your business operations. When it comes to protecting your business, knowing what type of business insurance you need is just as important as knowing what you do not need.
There are a few basics that are relevant for most companies:
Public liability insurance
This covers your business against the legal costs of a claim made for injury or damage to the property of a person, or another business, that occurs while you are providing a service. This can be either at your place of work or a separate location.
Imagine that a customer visits your store to purchase a product. On their way out, they slip on the wet floor, injuring their arm from the impact. The customer successfully sues you, alleging they slipped on water that you should have cleaned up beforehand. Luckily, with public liability insurance, your policy covers both the medical and legal expenses.
Business interruption insurance
Designed to cover the loss of income during the time it takes for a business to recover following a disaster, business interruption insurance protects your finances. If you need to temporarily close your business or cease activities, this type of insurance should provide coverage for the profits you would have earned, typical overhead expenses like rent, your employee’s wages, and the cost of moving to a temporary location.
Take, for example, flash flooding soaks the bottom level of your property, forcing you to temporarily suspend operations for 2 months. During that time, you incurred $10,000 of overhead expenses for bills and rent, and it is estimated that your company would have earned an operating income of $30,000. The total business interruption loss covered would probably be $40,000.
Commercial property insurance
This covers commercial buildings or offices that your business owns, helping to protect the value of your physical assets. In addition to the property itself, improvements, outdoor signage, fencing, and landscaping are also commonly included in property insurance, and it can also cover building contents.
Let’s say that you own a restaurant, and a faulty wire causes a kitchen fire. Your property requires extensive repairs and renovations. Without a policy in place, as the owner, you would be solely responsible for covering costs to rebuild or repair
Professional indemnity insurance
If your business is offering professional advice or consultations, professional indemnity insurance helps cover the cost of any legal action taken as a result. It can protect you against claims of negligence or failure to deliver a service as promised, which resulted in financial loss for the third party.
For instance, you’re an accountant and your client sues you for making a mistake in the paperwork that led to them losing out on tax advantages. The client takes legal action, but the case gets dismissed after a lengthy process and you are ruled not liable. Luckily your professional indemnity policy should still cover your lawyer and legal fees.
Commercial auto insurance
You’re likely to need this cover if you own or lease any vehicles under your company name. It protects the vehicles and the passengers inside them in the event of an accident and can also protect your vehicles from losses resulting from theft, vandalism, and certain weather events.
Imagine you own a plumbing service company, and one of your employees is out on a job with one of your company vans. On the way to a customer’s home, your employee gets distracted, crashing into a moving vehicle. The other driver is badly injured and requires medical treatment. Your commercial auto insurance would typically cover damages to the vehicles, as well as medical costs for the injured driver.
Getting the right insurance solution for your business
This is by no means an extensive list of all the insurance covers available for businesses — but it’s a great place to start. It’s also important to know that some means of cover are required by law for certain businesses, which varies by state.
At Western General Insurance, our expert brokers can accurately assess the needs of your business and help find a tailored solution to manage your risks. We can offer you an extensive range of insurance solutions, cover and additional add-ons, including — but not limited to — those above. Contact us today to find out more.