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- Protecting your Business: The Basic Types of Insurance You Should Have
Managing your own business can be extremely rewarding and extremely overwhelming. When you’re going into business for the first time, there are a lot of things to consider, but first and foremost on your mind should be your legal obligations and the protection of your employees and your product. There are well over a dozen different types of insurance you can buy for your business, and the types you need the most will probably depend on the kind of business you have. You may be overwhelmed by the number of options, but the ins and outs of understanding business insurance are pretty simple if you know the basic definitions.
General liability insurance is usually the first step for anyone looking to insure their business. Liability pays the damages if your business services or your product is found to cause bodily harm or property damage. It also pays for your defense in the event of a lawsuit. Professional liability insurance normally covers the areas that general does not – namely, claims of misrepresentation, violations of good faith, or even bad advising. Professional liability insurance is known by a few different names – you may be more familiar with its use in medical professions, where it is called malpractice insurance.
2. Employee Practices Liability
This is similar to other types of liability except it covers claims made by employees instead of customers. These can include sexual harassment, wrongful termination, or discrimination, most commonly. In the event of a lawsuit, this insurance will defend the case and pay any necessary damages.
3. Worker’s Compensation
Nearly every business with employees is required by law to have worker’s compensation. This is an insurance you invest in so that if your employees are hurt on the job, they lose the ability to file a lawsuit against you because they are granted a certain amount of money for medical expenses and personal hardship. Employers can appeal worker’s compensation claims that they feel are dishonest, but for the most part, the policy protects both your business and your employees in a way that is beneficial to both.
4. Commercial Property and Auto Insurance
Commercial Property Insurance protects the equipment and material you use to keep your business running – pretty much anything that is owned and used by the business. Commercial auto insurance is for your company cars and other vehicles, which could be especially important if your business involves delivery or transport of any kind.
5. Business Interruption Insurance
This type of insurance is particularly valuable if you work in a region where natural disasters or harsh winters can be the norm. Business interruption protects you in case there is damage to equipment or your offices, or any other disaster that temporarily prevents the business from continuing. It’s designed to insure that you are able to get back on your feet.
6. Health and Life Insurance
As your business becomes more successful, you may want to provide health insurance for your employees. Health insurance can pay off in many ways – it increases the quality of workers you can attract, improves productivity, and decreases turnover rate. The main reason for life insurance is in case something happens to you or any key leader of your business – someone with incredibly valuable knowledge and responsibilities that would be difficult to replace.
7. Commercial Umbrella Insurance
As the name suggests, this type of insurance covers almost anything that is not already covered by another policy. Umbrella insurance also covers the extra on liability insurance claims, so you end up paying nothing out of pocket in a lawsuit.
There are many specific types of insurance that pertain to individual types of businesses like retail stores, restaurants, salons, and everything in between. The insurance you look into will depend on what kind of equipment and employees you have, but there are a few basic types that apply in almost every case. If you are unsure where to prioritize when it comes to insurance, you can get advice from a banker, accountant, or other person experienced in your particular field. Insurance is about protecting your investments, but it’s also about giving your employees the safest possible environment to work in and building your reputation for responsibility, as well as becoming a name that people can trust.
About author: Amie Gottschalk is an avid blogger. You can follow her on Twitter @amiegottschalk.