Insurance is a risk management strategy which can prove very useful in the wake of a number of possible eventualities involving your business. When you’re new to the realm of business however, choosing the right type of insurance can be a confusing process. Your first step for understanding the insurance needs of your business is to ensure that you comprehend the nine different policies that make up the umbrella term of “business insurance.”
1. Property Insurance protects against business loss and damages occurring to the site of your business (and contents of said site), regardless to whether your business property is owned, leased or rented. You should check that your policy covers loss caused by all potential threats. Fire property insurance will NOT protect you from losses resulting from flash flooding (for example).
2. Casualty insurance exists to protect your business from loss factors external to your location. For example, if a flood occurs and devastates businesses located on the first floor of a building but you face problems because you are located on the second, this policy should cover any potential losses to your own business.
3. Liability Insurance policies aim to protect your business when someone attempts to sue it/you for negligence.
4. Personal car insurance does not cover any vehicles used within your business and this is why you will need Commercial Auto insurance (assuming your business uses vehicles).
5. Workers Compensation insurance insures employees against injuries gained whilst working. Workers compensation prevents employees suing their employers for work injuries but covers the costs of medical bills and damages in return.
6. Health insurance is offered to employees by many businesses as a competitive element. Workers prefer to work for employers who are willing to help with health care costs. The more risks involved in the job, the more comprehensive the health insurance is likely to be.
7. Should a key employee of your business die or become significantly disabled, then Life and Disability insurance will cover any losses. This is useful for anyone who owns a business and/or property with a business partner.
8. Business interruption insurance insures businesses against losses caused by interruption. If a business cannot run for a period of time because key machinery has broken down, this insurance will help to cover some profit loss.
9. Other Insurance or Scripted policies are for those businesses that have very unique insurance needs. If you feel you have additional insurance not covered by the previous 8 types, you should discuss addition coverage with your insurance broker.
Not all of these insurance policies will be relevant to your business but it is important to makes sure that you are insured for any eventuality. Risk assessment is the key when it comes to deciding which policies you should pay out for in order to protect your business. An insurance assessor will help you with this risk assessment, though I recommend that your get yourself several opinions and shop around for the best insurance packages. It is however, important to remember that cheaper packages may not offer comprehensive coverage and there may be loopholes in the contract, so be very careful.
You should also always question any included policies that you are unsure of – why are you paying for? What is this policy protecting your business against?