What is Business Insurance?
Business insurance is an effective way to protect a business from potential financial losses stemming from property damage, lawsuits, employee injuries/illnesses, theft, and much more. There are several types of business insurance, and a business’s needs will heavily impact which types are necessary to purchase.
Who Needs Business Insurance?
Ideally, every business should carry insurance in direct relation to its specific needs and risks. Insurance helps cover potential future costs from liability and damage claims that your business might not be able to comfortably afford on its own.
How Business Insurance Works
Business insurance is an agreement between a business and an insurance company where business risk is shared with the insurance company in exchange for periodic payments from the business. If the business sustains a loss and the insurance company agrees to cover it, the damages will be paid fully by the insurance company up to the given policy limits after the deductible has been met by the business owner.
Different Types of Business Insurance
There are many different types of business insurance, but the most common types are:
General liability insurance – Protection against possible outward damage that your business could cause for people/property.
Commercial property insurance – Protection for your property, equipment, furniture, and in some cases, restoration.
Professional liability insurance – Protection for your business if your professional services cause errors/damages.
Workers’ compensation insurance – Protection for your employees if they become injured or sick as a result of conditions on company property. If an employee dies while at work, this type of insurance protection ensures his/her family is compensated through workers’ compensation benefits. If your business employs people, it is likely a requirement in your state that your business carries workers’ compensation insurance.
Major Benefits of Business Insurance
While carrying business insurance has several major benefits such as coverage for accidents, losses, and damages, the most obvious is that insurance helps minimize the financial damages your business could incur without insurance protection. The idea of operating a business without carrying insurance might initially seem attractive from a financial standpoint, but in the long run, it is a poor decision that could end up costing your business thousands, or even millions out of pocket.