Insurance is Just One of Many Challenges for Business Owners
Business owners tend to focus on tangible costs — like inventory, payroll, rent, and advertising. It thus becomes all too easy to forget about costs that could be incurred by a business; some of which could be enough to cause significant financial loss to a company.
That’s where business insurance comes in. These types of insurance policies are designed to protect business owners in the case of an unexpected event, which could result in substantial losses. Here are the six basic types of commercial insurance available:
1. Commercial Property. If your business has any physical presence at all — from a storefront to a storage facility to inventory in your garage — then you’ll want to consider commercial property insurance. It’s like homeowner’s insurance for your business, and it would cover losses from naturally occurring calamities such as fire, flood, hail, and wind. It also protects your business from theft, vandalism, and civil disobedience. In addition, the policy would cover things like business interruption, document replacement, and lost revenue due to any of the above-mentioned issues.
2. Business Auto. Just like commercial property policies can be considered “homeowner’s insurance for your company,” business auto insurance acts much like the policy you have for your personal automobile in its coverage of business vehicles. The policy can apply to your personal vehicle if it is used as part of your business, such as for making deliveries or hauling equipment to a job site. Business auto insurance covers most of the same occurrences as its consumer counterpart, but it also protects your business assets in case of an accident. So if an employee hits and injures a pedestrian in your commercial vehicle, your insurance company would pay damages up to the policy limits you have elected.
3. Workers’ Compensation. This coverage is required under California law for all business owners, even if they only employ one individual. Workers’ compensation coverage will pay for medical costs if an employee is injured on the job, as well as income lost while he or she recovers from those injuries. If the worker is permanently disabled by the incident, this policy may also pay benefits until the person reaches retirement age. As with auto insurance rates that fluctuate based on the type of vehicle someone drives, rates for workers compensation insurance vary based on the type of work performed, so a job that carries less risk will usually call for smaller policy premium.
4. General Liability. In today’s litigation-happy world, every business should carry general liability insurance because it helps protect the company against lawsuits, more importantly, those that are lost. It also helps protect against all of the related legal expenses needed to contest these suits. So if a customer slips and falls inside a store and breaks a leg, or a tree-trimming service cuts a large limb that falls on top of a customer’s car, or even if an employee slanders a competitor, each of these scenarios may be covered under a general liability policy.
5. Directors and Officers. A business insurance policy helps safeguard owners, administrators, board members, and anyone else who may be listed as an officer or director of a company. Specifically, it protects these individuals if they are sued in relation to how they perform their corporate duties. A directors and officers policy is usually recommended in industries such as accounting, tax preparation, investing, and retirement planning, where large amounts of money are at stake.
6. Commercial Umbrella. Think of this as a “miscellaneous insurance” policy. While it may not cover every conceivable situation, it is designed to address issues that may fall through the cracks with other types of policies. In addition, commercial umbrella insurance acts as a “backup” policy if the coverage limits on other policies are exceeded. Therefore, if you are forced to pay millions of dollars in damages in a lawsuit and your standard insurance policy won’t cover the entire amount; commercial umbrella coverage will often pick up the slack, depending on your coverage amount.
If you want additional information on any of these business insurance types, be sure to contact AIS Insurance today. Don’t leave your business unprotected any longer.
This content is offered for educational purposes only and does not represent contractual agreements. The definitions, terms, and coverages in a given policy may be different than those suggested here and such policy will be governed by the language contained therein. No warranty or appropriateness for a specific purpose is expressed or implied.