Business Insurance – Which is Right for Me?

As the owner of a small business, you probably have many questions about insurance. This isn’t surprising considering all the implications that come along with insurance. For instance, if you were to form a limited liability corporation online in California, Hawaii, or Rhode Island, you could deduct the premium you pay for health and disability insurance on your taxes. Since it’s such an important yet potentially confusing subject, I’ve asked Erica Bell of Business.com to explain the different types of business insurance available, to help you determine what you need for your organizing business.

Insurance risk

© Ivaylo Sarayski / Depositphotos

Businesses that are just starting up or are looking to expand need to consider business insurance. Business insurance can protect your company’s assets in the event something unfortunate occurs. While some states mandate the purchase of various insurance policies, some states don’t. Make sure you do your research and buy an appropriate plan before any potential risks occur to ensure you’re covered. Here’s a rundown of 5 of the most common types of business insurance, what they protect, and who needs to invest.

Property and Casualty Insurance

Property insurance protects a person or business with an interest in physical property against its loss or the loss of its income-producing abilities. Casualty insurance protects a person or business against legal liability for losses caused by injury to other people or damage to the property of others. These two types of insurance are usually grouped together in a single policy.

  • You should invest in this type of insurance if your business has a physical location. Consultants may not need it. Talk to a consultant to make sure you understand your needs and find the appropriate policy.

Commercial Vehicle Insurance

Commercial vehicles are not covered under personal auto insurance. Commercial auto insurance covers your business for loss or damage to vehicles used by your business and for damage to others caused by your business vehicles.

  • If you have a business truck, van, or other auto, make sure to invest in commercial auto insurance before driving anywhere. Accidents can happen at any time and you don’t want to be without insurance in the event one takes place.

Liability Insurance

There are few different types of liability insurance and the two most common are professional and product. Product liability insurance protects against financial loss as a result of a product defect that can cause injury. Professional liability insurance protects you from lawsuits that are results of malpractice, negligence and errors.

  • Nearly every business needs some type of liability insurance. Whether it is a general liability plan in case someone was to fall on site or a product liability policy in case a defect occurs, you need to be covered. An errors and omissions liability plan is great for consultants.

Workers’ Compensation

This type of insurance is mandated by law and covers employees if they are injured on the job, in exchange for the employee’s right to sue. It provides wage replacements and medical benefits to injured employees. Your business can choose a commercial insurance carrier or go through a state program.

  • Every business needs to invest. If you have employees, by law you must participate in a workers’ compensation program. There isn’t a debate about what kind of business needs this insurance, because every business does.

Life and Disability Insurance

Disability insurance is mandatory in five U.S. states: California, Hawaii, New Jersey, New York and Rhode Island. Life and disability insurance covers your business in the event of the death or disability of key owners, partners, or employees. There are variations of each so make sure you’re getting the right coverage.

  • Especially if you run a small business, this is a type of insurance you’ll want to consider. If a disability of the owner occurs, various policies can assist them and/or their business with costs such as business overhead and benefits.

Your business is valuable; not only to you, but your employees and consumers as well. Making sure you’re covered and they’re covered is essential. Protect your business and cover your bases. Talk to a business consultant, compare insurance providers, and conduct online research to determine where your business may be at risk and find a policy that covers it.

Erica Bell is a small business writer who focuses on topics such as small business insurance and liability insurance. She is a web content writer for Business.com.

Comments

  1. My car insurance company covers my car for only a certain amount of business travel and will not cover me if I’m carrying product. They also told me that if I put my business name on my vehicle (sticker/magnet) then they would automatically class my vehicle as “commercial” and charge me even more. I’m glad I checked with them before I went to the expense of getting vehicle signage!!

    • I had to upgrade to “commercial” when I got lettering put on my car, but it turned out to not be as big a difference as I’d expected – and it’s good to know I have the peace of mind of knowing I’m covered if I get into an accident on my way to or from a business-related activity.

  2. To be in the world of business, it is important to know a lot of fact and information. It can be an advantage later on because you may know the possible solution to your problem. As what you have mentioned business insurance is important to protect the business in many aspects or situation that may come. There are types of business insurance that exists nowadays. It is also important to know the specific policy of the possible insurance to know that it is suitable to your business. Yes, there are a lot of factors to consider not only yourself and your company but as well as the employees and other entities that is involve in your company. By the way, your explanation regarding the common types of business insurance is easy to understand and interesting that will definitely inform us.

  3. Insurance can get complicated quick. This is a comprehensive snapshot of what any business owner should consider when getting insurance. Whether you’re online, brick & mortar, or both, you’ll need to look at what your options are. Online companies will want to consider insuring their information in the event their systems are compromised.

  4. Great article. Business insurance is incredibly important, especially if you run a “dangerous” business. It helps out a lot.

  5. Nice article on the 5 most common types you need. Starting a business without such insurance can make you bankrupt in seconds, especially because people do sue for nothing in our society.

  6. Thanks for explaining these. It can be really tough as a business owner to keep everything you need to have straight in your mind and it certainly helps to have it all laid out for you in an easy to understand way.

  7. This article did a great job of explaining the different options available for business insurance. Some businesses, like construction companies, will need a lot more insurance than a company whose employees work in an office. The higher the chance of accidental injury on the job, the more extensive the insurance should be. Thanks for the thorough explanation.

  8. I think that I need to get property and casualty insurance. I just bought a building to start up my small business. That’s really the only asset I have right now. Thanks for the information about that kind of insurance. I want to make sure I protect all of my assets.

  9. Great Share. Business insurance is very important, especially if you run a “risky” business. It helps out a lot.The higher the chance of accidental injury on the job, the more extensive the insurance should be.

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