Types of Business Insurance You May Need
Is Your Business Covered for the Unexpected?
Nothing in life is certain, and this includes things that can affect your business operations. Natural disasters, storms, and even terrorism are all factors that can wreak havoc on your professional life. Take time to do a business insurance check-up and make sure the unexpected does not stop your business in its tracks. There are some basic types of business insurance that are essential to your operations including:
A business property insurance policy pays for damages to your business property resulting from a covered loss. The policy not only protects your place of business but also your contents including office furniture, computers, your business inventory and other items essential to your business operations. Many property insurance policies also provide for expenses for protecting your business from further damage after a loss such as a fire (including such things like debris removal) and the money needed to keep operating your business until the damage from the loss is repaired.
As a business owner, you can be sued by others for any damage resulting from the negligence of your business services that cause harm to others such as a defective product. Liability insurance pays for your damages and legal expenses if you are sued up to your policy limits. Your liability policy will also pay for medical fees of others who are harmed by your business. This may be especially important if you run a child care business. It's also possible to purchase fiduciary liability insurance to cover possible claims made against the administration of your benefits policies.
Any vehicle that you use in the operation of your business should be included on your commercial auto policy. Most personal auto insurance policies exclude vehicles used for business purposes. Your commercial auto policy will pay for bodily injury or property damage to others caused by the operation of your business vehicle up to your policy limits. You can customize a commercial auto insurance policy to fit your specific needs such as paying to replace a vehicle that is involved in an accident.
Most states require employers to carry workers compensation insurance. Texas business owners are not required to carry workers compensation. The requirement is for employers who have the required number of employees (this ranges from three to five depending on what state you live in). A workers compensation policy will pay for medical care and lost wages for employees who are injured on the job. The coverage pays damages regardless of who is at fault in the accident. If the employee dies, the policy will pay compensation benefits to the employee’s family. If you have a smaller business, you may not be legally required to carry workers compensation insurance, depending on what state you live in. However, even if you are not legally required to do so, carrying this coverage may still be a good idea to make sure you are protected from legal liability when an employee is injured on the job.
If your business is involved in professional services including giving professional advice, making recommendations, designing products, etc.; you are subject to being sued if you give faulty advice or make the wrong recommendation that results in harm to others. An errors and omissions policy will protect you from these errors in judgment and pay for legal expenses up to the policy limits.
In addition to these basic types of business insurance, there are some other types of business insurance you may need. The New Year is a great time to review your insurance coverage, but anytime you make a major change in ownership or operations, you need to review your coverage with an insurance professional. Here are a few types of business insurance you may need but not have:
Terrorism Insurance is something we hear more and more about these days. Chances are, before the terrorist attacks of 9/11, you had never heard of terrorism insurance. It is an insurance coverage that protects your business operations against losses resulting from terrorist activities.
Underground Storage Tank
Underground storage tanks pose a special kind of risk for business owners. An underground leak of hazardous materials could potentially cost your business thousands of dollars. Underground storage tank insurance may save you from financial ruin should your underground tank begin to leak. It will pay for things such as site cleanup and liability costs should the leak cause damage to others or their property.
Pollution Liability and Environmental
A general liability policy for your business may contain exclusions for pollution and leave you unprotected against pollution-related losses. Business owners should evaluate their insurance needs for pollution liability and other types of environmental insurance. Pollution liability insurance is an important coverage for independent contractors. Clean up of environmental waste can potentially cost millions of dollars. Depending on the type of business you own, the type of pollution liability coverage needed will vary.
Engineers and Consultants E&O
Engineers and consultants who may face legal liabilities as the result of the services they provide. This included damage caused by contractors you use when outsourcing your business’ professional services. This policy provides protection if any of these contractors are negligent and cause damage to others. Some clients require contractors to have Engineers and Consultants E&O insurance before they are hired.
Business Interruption Insurance, also known as Business Income insurance is found as an endorsement to a Business Owners Policy (BOP), a Commercial Package Policy (CPP) or a commercial property policy. If you must suspend business operations due to some type of disaster or unexpected event that causes damage to your business property, this coverage pays for operating expenses until you can make the needed repairs and begin business operations again.
Transportation of Hazardous Materials Liability Insurance (HAZMAT):
HAZMAT insurance covers the transportation of hazardous materials by truck, train, boat or by aircraft. This policy covers liability for loading/unloading cargo, in-transit coverage, site pollution cleanup and ongoing contamination caused by a spill of hazardous materials. HAZMAT insurance is a legal requirement for hazardous material haulers.
You’ve undoubtedly heard the disturbing stories about how hackers were able to access the private information of a company’s employees or customers. If your company stores this type of private information on a computer or server, you are legally liable for protection this personal information. Data Breach insurance protects business owners from legal liability resulting from this type of breach, whether the information is leaked electronically or by some other means such as a paper file.
A Directors and Officers Insurance policy protects you as a director or officer of the company if your actions negatively affect the company’s profitability or if the company is sued because of your actions. The policy will pay for legal damages and fees.
Employment Practices Liability
If any of your employees file a claim against you for discrimination including age, race, disability, sexual discrimination, wrongful termination or some other type of discrimination; this coverage protects you these types of employee-related claims.
An Excess Casualty policy, or excess liability policy, provides extra protection from a catastrophic event such as damage caused to your business by a hurricane. If the wind blew in your roof and customers were harmed; if the costs exceed the limits of your policy, this is where your excess casualty policy would pick up the extra costs. This policy is similar to an umbrella policy.
If you thought your business interests were covered with property or liability insurance only, you could be sadly mistaken. Don’t wait until you suffer a loss to think about buying the proper business insurance coverage. These are not the only types of business insurance you may need. Schedule a consultation with a business insurance professional to review your business insurance coverage and make sure your business’ assets are protected from life’s unexpected events.