Understanding the Types of Business Insurance Coverage: Which Policies Do You Need?

Stay Open with Business InsuranceEvery small business needs business insurance for protection against the many threats your business will face while operating. In a perfect world, you wouldn’t need business insurance, but just like health and auto insurance, it’s always good to have in the event that something unexpected happens. Having this type of protection for your business is what can ultimately determine if your business will have a flourishing future or come to a screeching halt.

But the real question, in reference to business insurance, is what type of business insurance policy do you need?

Well, a good rule of thumb to follow when seeking business insurance is that it’s recommended for all business types to invest in a general liability policy. A general liability policy is going to protect your business against property damages, bodily injuries, various marketing/advertising damages, and any type of incidents involving your clients or customers.

Once you have general liability insurance, you can then start looking at the other types of policies you may need based on the type of business you’re running and the risks involved.

Having proof of business insurance is actually one of the major requirements to lease an office space. But all too often, business owners fail to read the fine print and forego business insurance, thinking they’ll be able to rent without it… This is one of the biggest mistakes you can make when renting an office space.

But that’s the way business works, right? Trial and error, and hopefully learning from your mistakes. But the one mistake you can always avoid is running a business without business insurance… You want to always have that coverage… And remember, your business may require you to have multiple policies.

Business Insurance Policies Explained

Worker’s Compensation Insurance

If you have employees, your business is required by law in most states to carry worker’s compensation insurance. This type of insurance provides coverage in case one of your employees suffers an injury while on the job.

According to injuryfacts.nsc.org, the top three leading causes of work-related injuries are:

  1. Overexertion and bodily reaction: This injury is a result of excessive physical effort including lifting, pulling, pushing, turning, and holding. It’s a strain or type of stress on the body.
  2. Slips, trips, and falls: These types of injuries are typically accidental and involve everything from falling from structures or against objects to slipping on liquids and tripping over misplaced objects.
  3. Contact with objects and equipment: This injury can be the result of bumping into equipment, being squeezed or compressed between heavy or shifting objects, or a worker getting struck by a moving object.

All of these injuries are very common when you have employees, regardless of the type of business you’re running. To protect yourself, your assets, and most importantly, your employees, you want to make sure you have worker’s comp insurance before you take on a single employee.

Professional Liability Insurance

Professional liability insurance is the coverage you need for any type of mistake you make while running your business, which is perfect for all businesses, especially if you’re running a business where you’re providing services of any type.

Using professional liability, for example, you’re going to be protected against claims of:

  • Misrepresentation
  • Giving wrong or inaccurate advice
  • Negligence

In your mind, you’re thinking it was an accident or mistake, and though your intentions were good, your mistakes have the potential to cause businesses and clients major financial losses. Because of that, they have every right to sue you for the financial losses and other damages they incurred due to your mistake or “mishandling” of your services.

Product Liability Insurance

How many times have you seen in the news various product recalls for big brand companies? You see it all the time! Do you recall back in 2016 when Samsung had to recall all the Galaxy Note 7 phones because there was a defect in the battery of the phones causing it to get too hot, which then led to the phone catching fire and exploding? Samsung faced serious lawsuits from those injured from those phones.

Those defects were unintentional but because the phone was defective, injured customers sought damages for their injuries. In running your business, you can’t guarantee that the products you’re selling won’t be defective either. And because of that uncertainty, you want to make sure your business is protected with product liability insurance… just in case a product or two goes haywire.

If you wnat to keep your business healthy, you better pay attention the types of business insurance you need.