Many types of insurance are available for businesses, and it can be confusing to determine which is suitable for your company. The best way to determine which type of insurance you need is to assess your risks and then find a policy that covers those risks.
Here are some of the most common types of business insurance:
Errors and Omissions Insurance
Errors and omissions insurance, or E & O insurance, protects businesses from negligence claims or errors in their advice or services. This type of insurance is essential for companies that provide professional services, such as consulting, accounting, or legal services.
Errors and omissions refer to a business’s legal liability for any mistakes or oversights that cause financial loss to a client. E&O insurance can cover the costs of defending against a claim, as well as any damages that are awarded.
As such, your business will be protected financially if you are sued for damages because of an error or mistake that you made in your work. This type of insurance can cover the cost of legal defense, settlements, and judgments against your business.
Property insurance helps protect your company’s physical assets, such as buildings and equipment. If a fire, storm, or another type of hazard causes damage to your property, this coverage will typically cover repairs or replacement costs. Property insurance may also reimburse you for any lost revenue while your business is without using a damaged or destroyed asset.
Losses can occur as a result of many hazards, such as:
- Water damage
Some policies also include business interruption coverage, which will typically reimburse you for lost profits while your business is shut down due to a covered event.
Liability insurance protects you if someone sues you because they were injured on your property or because you were negligent.
General liability insurance is the most common type, which protects you against bodily injury or property damage claims. Liability insurance may also include medical payments coverage, which helps pay for someone’s medical bills if injured. Another type of liability insurance is workers’ compensation insurance, which benefits employees who get injured on the job.
If you have employees, you are required to purchase this coverage. Liability insurance is essential because it can cover the legal costs and settlements related to lawsuits brought by injured parties.
Moreover, it’s usually comprehensive and will protect you from legal action related to the core operations of your business.
Workers’ Compensation Insurance
Workers’ compensation insurance provides financial benefits to employees who are injured on the job. This type of coverage is required by law in every state.
The insurance is designed to cover medical costs and a percentage of lost wages over a specified period. This coverage helps protect your workers and the state if an employee gets injured and cannot work.
Car and Auto Fleet Insurance
This coverage protects your business vehicles and passengers injured in a car accident. The insurance can cover medical costs and lost wages for injured passengers and pedestrians in an accident involving one of your company’s vehicles.
Car and auto fleet insurance are helpful because the insurance company typically pays out to any injured parties regardless of who was at fault in the accident.
Cyber Liability Insurance
Cyber liability insurance protects your business against financial losses related to data breaches. This coverage can reimburse you for costs associated with investigations and lawsuits related to data breaches.
The most significant difference between general and cyber liability is that the latter usually has a substantial deductible.
Health and Disability Insurance
Health insurance covers medical costs, such as doctor visits, hospital stays, and medical supplies. Disability insurance often works to cover a percentage of your income if you are unable to work due to illness or injury.
Business owners who do not have access to company-provided health and disability insurance are strongly advised to purchase coverage for themselves.
Life Insurance for Employees Only
Life insurance for employees only covers the financial obligations of deceased employees and is typically purchased for executives who work for the company. The coverage will help your company meet financial obligations like death benefits and final paychecks for workers who pass away.
No matter your business type, having the right insurance coverage is essential. The best way to determine what type of insurance you need is to talk to an experienced agent or broker who can help you assess your risks and choose the right policy for your business.