Buying business insurance is among the best ways to prepare for the unexpected. Without proper protection, misfortunes such as the death of a partner or key employee, embezzlement, a lawsuit, or a natural disaster could spell the end of a thriving operation.
Ranging from indispensable worker's compensation insurance to the relatively obscure executive kidnapping coverage, insurance is available for nearly any business risk. Considering the multitude of available options, business owners must carefully weigh whether the cost of certain premiums will justify the coverage for a given risk.
General Liability
Many business owners buy general liability or umbrella liability insurance to cover legal hassles due to claims of negligence. These help protect against payments as the result of bodily injury or property damage, medical expenses, the cost of defending lawsuits, and settlement bonds or judgments required during an appeal procedure.
Product Liability
Every product is capable of personal injury or property damage. Companies that manufacture, wholesale, distribute, and retail a product may be liable for its safety. Additionally, every service rendered may be capable of personal injury or property damage. Businesses are considered liable for negligence, breach of an express or implied warranty, defective products, and defective warnings or instructions.
Home-Based Business Insurance
Contrary to popular belief, homeowners' insurance policies do not generally cover home-based business losses. Commonly needed insurance areas for home-based businesses include business property, professional liability, personal and advertising injury, loss of business data, crime and theft, and disability.
Internet Business Insurance
Web-based businesses may wish to look into specialized insurance that covers liability for damage done by hackers and viruses. In addition, e-insurance often covers specialized online activities, including lawsuits resulting from meta tag abuse, banner advertising, or electronic copyright infringement.
Worker's Compensation
Required in every state except Texas, worker’s compensation insurance pays for employees' medical expenses and missed wages if injured while working. The amount of insurance employers must carry, rate of payment, and what types of employees must be carried varies depending on the state . In most cases, business owners, independent contractors, domestic employees in private homes, farm workers, and unpaid volunteers are exempt.
Criminal Insurance
No matter how tight security is in your workplace, theft and malicious damage are always possibilities. While the dangers associated with hacking, vandalism, and general theft are obvious, employee embezzlement is more common than most business owners think. Criminal insurance and employee bonds can provide protection against losses in most criminal areas.
Business Interruption Insurance
Some businesses may wish to acquire insurance that covers losses during natural disasters, fires, and other catastrophes that may cause the operation to shut down for a significant amount of time.
Key Person Insurance
In addition to a business continuation plan that outlines how the company will maintain operations if a key person dies, falls ill, or leaves, some companies may wish to buy key person insurance. This type of coverage is usually life insurance that names the corporation as a beneficiary if an essential person dies or is disabled.
Malpractice Insurance
Some licensed professionals need protection against payments as the result of bodily injury or property damage, medical expenses, the cost of defending lawsuits, investigations and settlements, and bonds or judgments required during an appeal procedure.
What is Workers' Compensation Insurance?
Workers’ compensation insurance provides coverage for an employee who has suffered an injury or illness resulting from job-related duties. Coverage includes medical and rehabilitation costs and lost wages for employees injured on the job. This insurance can be obtained from a licensed insurance company. The law in most states requires some form of workers’ compensation insurance. Refer to the workers' compensation authority in your particular state.
What is a surety bond?
A surety bond provides a form of guarantee that you will complete the work that you have committed to perform. Often referred to as a performance bond, the surety bond guarantees that you have the financial resources to complete the job from start to finish. Through its Surety Bond Program the SBA can guarantee bid, performance, and payment bonds for contracts up to $2 million for small businesses that cannot obtain bonds through regular commercial channels.
Will my homeowners' insurance cover my home-based business?
More than likely your homeowners' insurance will not cover your home-based business. In fact, operating a business out of your home may negatively impact some of your other homeowners' coverage. If you check your homeowners' policy, you may find that your small business is either underinsured or even uninsured. In most cases you will find that the coverage of business equipment such as computers, fax machines, copiers, and printers is limited to less than the cost of a new computer alone. Also, your homeowners' liability insurance coverage probably won't cover any injuries that may occur to the employees or clients that you have on your premises. Check with your insurance carrier to determine your exact coverage.
*Courtesy Small Business Administration
