When you establish a business, you automatically get exposed to certain risks based on the nature of your enterprises. A catastrophic event such as fire or a liability lawsuit can close your business. Having business insurance coverage is one way of reducing and transferring such risks. However, there are different types of insurance covers for a business. This post highlights the most critical types of business insurance policies you need for your company.
Property insurance is the most crucial type of business coverage for all enterprises. Ordinarily, every business owns some form of property to support enterprise activities. Such properties include buildings, furniture, equipment, electronics, and stock. Broadly, the items are vulnerable to theft, fire, and natural calamities, including floods and earthquakes. In the event of such incidences, the business may suffer huge losses that may paralyze continued operations. Thus, property insurance helps in meeting the cost of repairing and replacing damaged and lost properties. Nevertheless, take time to find out the type of incidences covered in a typical property insurance policy.
Workers' Comp Insurance
In most states, the law requires that businesses maintain worker's comp insurance coverage. Thus, the minute you hire a single employee, you will need to add worker's compensation insurance to your business insurance policies. Essentially, worker's comp insurance helps compensate workers who suffer from injuries and illness resulting from work duties. For instance, a factory employee may experience a slip-and-fall accident, while an office worker may suffer mental illness from work pressure. Worker's comp insurance takes care of the following costs:
- Cost of medical treatment
- Permanent disability
- Death compensation
- Change of vocation
- Lost wages
Product Liability Insurance
Does your business manufacture products for sale to the general public? Then it would help if you secured product liability insurance. Whether or not you take measures to ensure your products are safe for consumption, you may still face lawsuits due to product damages. For instance, the product may have medical side effects or fail to perform as specified. Consequently, the customers may sue you for damages. With product liability insurance, the insurer would meet the cost of legal defense and, if need be, consumer compensation.
Professional Liability Insurance
Professional liability insurance covers businesses that offer services such as knowledge, skills, and advice. Typically, such services can result in a client's loss, damages and injuries. For instance, financial advice from a consultant may lead to loss of investment in the money markets. In such a case, the client may sue the consultant due to acts of omission and commissions. Notably, professional liability insurance provides indemnity by meeting the legal costs and claims resulting from such lawsuits. However, professional liability insurance varies across industries with customized policies for different types of businesses.
Ultimately, business insurance protects businesses from significant financial loss and lawsuits. Given the diversity of business risks, consult an insurance agent for appropriate and adequate coverage.