No matter how big or how small your business is, you need to know and have a certain type of commercial insurance if you want it to grow further with security. Commercial insurance is one of the most important investments you can make when starting a new company; it serves as a protection for your company from any severe financial loss. As a matter of fact, it can be the difference between going under and staying afloat in case of financial damage or a lawsuit.
Of course, you don’t want disasters to happen to your business. However, if in case there would be really unexpected or miscalculated tragedies that arise, it’s best if you have a handy insurance policy fit for your enterprise. It’s important to be knowledgeable of the different types of commercial insurance, and work with a reputable agent to create the most appropriate policy for your business.
Commercial insurance is also crucial for small businesses. It protects you from commonly experienced losses including property damage, theft, and employee injury. With adequate insurance, companies can more easily recover from these types of losses. Without it, you risk going out of business. The following are the most important commercial insurance types that any businessman should know:
Property Insurance is the type of insurance that protects the physical property and equipment of a business against loss from theft, fire or other perils. All-risk coverage covers against all risks, hence the name. On the other hand, named-peril coverage covers only against specific perils named in the policy.
Generally speaking, property insurance policies provide financial reimbursement to the owner or renter of a structure and its contents in the event of damage or theft. Property insurance can also include several other sub-divisions of insurance such as homeowners insurance, renters insurance, flood insurance and earthquake insurance.
Personal property is typically covered by a homeowners or renters policy, unless it is of particularly high value, in which case it can usually be covered by purchasing an addition to the policy called a rider. If a claim is filed, the property insurance policy either reimburses the policyholder for the actual value of the damage, or the replacement cost to remedy the damage.
When it comes to insurance for your physical property, you want to make sure to get a policy written on an all-risk basis rather than on a named-peril basis. While the latter only covers the specific perils named in the policy, an all-risk policy covers you for virtually any kind of disaster. The all-risk policy allows you numerous benefits like the ability to eliminate duplication and overlap and avoid gaps in trying to cover your liabilities through a number of specialized policies. It can also encourage quicker settlements by working with one agent and one attorney, while also being able to reduce the expense of having many different policies.
Meanwhile, Liability insurance is any type of insurance policy that protects an individual or business from the risk that they may be sued and held legally liable for something such as malpractice, injury or negligence. If you’re starting out a business that’s quite risky and has a high chance of errors or mistakes could happen – such as food manufacturing, medical practices, etc. – then it would be best if you can secure liability insurance.
Liability insurance policies cover both legal costs and any legal payouts for which the insured would be responsible if found legally liable. Then again, intentional damage and contractual liabilities are typically not covered in these types of policies.
Liability insurance is very important for those who may be held legally liable for the injuries of others, especially medical practitioners and business owners. A product manufacturer may purchase product liability insurance to cover them if a product is faulty and causes damage to the purchasers or any other third party. Business owners may purchase liability insurance that covers them if an employee is injured during business operations.
Commercial general liability insurance can also protect a business from claims arising from injuries that occur within the workplace, or injuries or damage caused by company employees. Should an employee accidentally damage a customer’s vehicle with a piece of equipment, for example, the coverage can pay the cost of repairs. A general liability policy can also cover a company’s legal costs as well as the judgment or settlement amount.
Another example of liability insurance is product liability insurance. This type of insurance is best for businesses that manufacture products for sale on the general market. Product liability insurance protects against lawsuits arising from injury or death caused by their products.
Indemnity insurance is also another kind of liability insurance. It provides coverage to protect a business against negligence claims due to financial harm resulting from mistakes or failure to perform. Errors and omissions (E&O) coverage is required by businesses engaged in financial and legal services, such as insurance, accounting, mortgage lending and law firms. Other professions and occupations, such as contractors, consultants and maintenance professionals carry indemnity insurance as a practical matter because of their exposure to “failure to perform” claims.
Workers’ Compensation Insurance
If you’re looking for insurance for you and your family, you would normally go for a term or life insurance plans from companies such as State Farm, All State or Key Man Life Insurance, as they offer the policies at a level fit for individuals and their loved ones. However, if you’re a businessman or a worker, you need to look at workers’ compensation insurance providers, as their policies are entirely different from the normal life insurance ones.
Workers’ compensation insurance involves policies that covers medical and rehabilitation costs and lost wages for employees injured at work; required by law in all states. Often called workers comp, workers’ compensation insurance is a state-mandated program consisting of payments required by law to be given to an employee who is injured or disabled in relation to their work.
The federal government does offer its own workers’ compensation insurance for federal employees, but every individual state has its own workers’ compensation insurance program. Be sure to check your own state’s workers’ compensation benefits laws by referring to the designated office in your state as seen on the State Workers’ Compensation official page of the U.S. Department of Labor’s website.
In most situations, injured employees receive workers’ compensation insurance, no matter who was at fault for the injury. Because these workers comp benefits act as a type of insurance, they preclude the employee from suing his or her employer for the injuries covered.
Today, modern workers’ comp laws provide fairly comprehensive and specific benefits to workers who suffer workplace injury or illness. Benefits include medical expenses, death benefits, lost wages, and vocational rehabilitation. Failure to carry workers’ compensation insurance or otherwise meet a state’s regulations in this regard can leave an employer exposed not only to paying these benefits out of pocket, but also to paying penalties levied by the states.
Not every business is required to purchase workers’ compensation insurance. Generally speaking, sole proprietors and partnerships aren’t required to purchase workers’ compensation insurance unless and until they have employees who aren’t owners. Then again, most states allow sole proprietors and partners to cover themselves for workers’ compensation if they choose to, but it isn’t required. A general rule is that if you have employees who aren’t owners of the company, you probably need workers’ compensation insurance.