Key Types of Business Insurance to Keep Your Company Protected
Every company faces risks, and it's part of your responsibility as a business owner to ensure you'll be able to weather any potential problems. There are different types of business insurance available to help you achieve this goal.
Just like your auto or homeowners policy, business insurance is the kind of product you hope you never have to use. But without it, you won't be protected from potential financial losses in the wake of an unforeseen event. For example, you may not have enough money to continue operations after paying for a customer's injury on the premises or having to replace equipment damaged in a fire.
That's why it's important to know exactly what types of business insurance you need to keep your company afloat and thriving through any potential business risks.
Common business insurance policies
Depending on your business, there are various types of business insurance that may fit your needs. Make sure you get the most ideal coverage and avoid paying for insurance policies that don't apply to your industry. Here are some of the most common business insurance policies you may need for your enterprise.
Liability coverage protects your business in case a person is injured or their property is damaged on your premises and they decide to bring a lawsuit against your company. If this happens, your liability policy will help cover the costs of defending you and the damages to the claimant.
A property insurance policy protects your business's property in the event of loss due to fire, theft, vandalism or other types of damage or destruction—although you'll likely need to purchase separate flood insurance. If you own the building you operate in or any equipment, tools, computers or other business-related property, you'll likely need to carry this type of insurance.
Professional liability insurance
Commonly known as errors and omissions insurance, or E&O insurance, professional liability coverage protects business owners who provide services rather than products. This type of policy protects you if you're sued for failing to provide or improperly providing your services.
Commercial auto liability insurance
If your business requires the use of automobiles that carry employees, customers, products or equipment, this policy can help protect these vehicles. With such a policy, all of your company's vehicles are protected in the event of damage or collision.
Workers' compensation insurance
In many states, businesses with employees are legally required to carry workers' compensation insurance. This type of policy provides replacement for lost wages as well as medical benefits to employees who are injured or becomes sick at work. Providing this benefit also generally means your employees give up the right to sue you for a work-related injury or illness.
Business interruption insurance
This type of policy protects you from lost income if a covered event affects your business. This can include things like theft, fire, falling objects, lightning or wind. For example, if a tree falls on your property and destroys the roof and makes the building uninhabitable during repairs, business interruption insurance may reimburse you. It could potentially cover the lost income from any destroyed merchandise and expenses you might incur by temporarily moving your operations to another location.
Business owner's policy
Many insurers offer a package that covers the majority of insurance that small business owners need. This offering, known as a business owner's policy, or BOP, usually includes property, liability and business interruption insurance. Many insurers will allow business owners to adapt their BOP so they can choose the types of insurance that are most critical to their operations.
Match your coverage to your needs
Determining what business insurance coverage you need depends greatly on what type of business you run. It's important to only invest in the policies that match your business needs so you aren't paying for unnecessary coverage.
Having the proper coverage will allow you to focus on running and growing your business—rather than worrying about the unknown.
Financial insights for your business
This information is provided for educational purposes only and should not be relied on or interpreted as accounting, financial planning, investment, legal or tax advice. First Citizens Bank (or its affiliates) neither endorses nor guarantees this information, and encourages you to consult a professional for advice applicable to your specific situation.
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