Even if your personal assets are safe, your company is always at risk—unless you have the right type of business insurance. But when you’re faced with a lengthy list of polices, it can be difficult to know exactly what you need. Here’s an explanation of the most common types of business insurance on the market.
General liability insurance
General liability coverage is a good choice for almost any operation. Having liability insurance can help you if someone suffers an accident or injury on your property, or claims you were negligent in some way. The coverage may pay for medical treatments, and it can protect you from having to pay large amounts of money because of libel or slander.
Errors and omissions insurance
Errors and omissions insurance is another type of liability coverage. It shields you against claims stating that poor quality of work or negligence on your part led to harm or financial loss. If you offer services, such as financial advice, you’re likely to benefit from this type of insurance.
Product liability insurance
If your business focuses on selling products, not services, you may want to consider purchasing product liability insurance. This will protect you from financial loss if someone is injured by a defective product. Even if you have great confidence in your product, keep in mind that mistakes do occur, and product liability insurance will benefit any product-based business.
Depending on where you operate your business from, different varieties of property insurance are available. The two most common types are:
- Commercial property insurance—this protects you from losses due to fire, storms, and vandalism. This insurance may cover computers, equipment, company records, and lost income.
- Home-based business insurance—you should purchase this if you operate your business from your home. Your regular homeowner's policy will cover some losses, but you will need the extra insurance to protect you from liability and other risks.
Other types of insurance
You may need other kinds of insurance to safeguard your business from risks specific to your industry. For example, if you handle hazardous waste, you may need some type of environmental insurance policy. And if you operate a shipping company and own a fleet of vehicles, you'll have specific transportation insurance needs. The best way to find out what business insurance coverage you need is by talking with an insurance broker who has experience helping businesses like yours.
How to choose your insurance policies
Even after you talk to an insurance broker, you must take some steps to ensure you're adequately covered. In his step-by-step guide to business insurance, attorney John Kane recommends you do the following:
- Keep in mind that not all insurance providers offer the same quality of service and coverage. Take a close look at a company's client reviews and be sure to inspect any contract. The fine print may show that a policy isn't what it seems to be at first glance.
- Look beyond business insurance cost. Cheap policies are attractive, but if the coverage is incomplete, you may end up paying more in the long run.
- Make sure the policy covers the correct parties. Technicalities, such as a misspelled or misplaced name, may prevent you from getting fast and reliable insurance payouts when you need them. Also, make sure you understand how the policy defines the insured parties.
Making sure your business is insured is a vital step, but choosing the right policies is just as important. It can help to talk to a qualified insurance professional who can suggest a custom package so that future incidents don't damage your business operations and reputation.