Why You Need Business Insurance
The term 'business insurance' encompasses a variety of products that are needed by various businesses. There isn't generalized business insurance, there isn't generalized any kind of insurance, the type of insurance you need is based on your personal situation, just like with your car or home. You need to provide the insurance agent with information about your business so that they can help you decide what forms of business insurance you need. With that said, every business requires insurance to cover against losses, although those losses can fall into a variety of categories.
Your insurance agent needs to know a lot of information about your business - from the size of your building, the type of work you do right down to the business finances. All of these factors aid the underwriter (the person who writes the insurance policy) to determine the type of business insurance you need and how much you will have to pay for it (the premiums).
Let's look at the 9 types of business insurance and why you would need them:
- Property insurance - insurance for the building and contents. This protects you from losses and claims on the building you are in and all the contents. Whether you own or rent your space, you need to have property insurance. Most landlords and leasing companies require that you have this type of insurance in order to rent the space from them. This type of business insurance protects you from multiple perils (events) or single perils that could destroy or damage your property (building and/or contents). For example, you could have an all perils policy or a fire peril policy - with the fire peril policy, your property insurance only covers you if the damages and losses were obtained because of fire.
- Casualty insurance - insurance for losses to the business. Most often, property and casualty insurance are put together in a package for a business and is the most common business insurance that is needed.
Liability insurance - insurance that protects you from liability charges that are legally imposed (being sued for negligence). This is especially needed if you provide a service for people working on people (such as a doctor) where the chances of you being sued for negligence are high.
- Commercial auto insurance - insurance for your business fleet of vehicles, which insures for damage to others, vehicles and property. Your personal auto insurance doesn't cover your business vehicles or any collision or accident that you are in with your business vehicle. Commercial auto insurance is required for businesses that use company vehicles and is based on similar information that you need for your personal vehicle. You will have to provide the insurance agent with the names, driver's license numbers and records of anyone/everyone who will be driving the vehicles.
- Workers compensation insurance - specific insurance for employee's injuries on the job. If you run a risky business (like carpentry) you need this insurance to protect yourself if an employee is hurt while working for you. This is workers compensation claims, but you need to be insured with them (listed with them) and pay your premiums otherwise workers compensation will not pay for your employees injuries, which leaves you liable and responsible to do so yourself.
- Business interruption insurance - insurance for losses to your business finances (cash flow, profit) that is caused by an interruption where you can not run your business. Your property and casualty insurance will pay for the damage to your building and your products, but if you make widgets and the widget making machine is damaged, your income is halted as well - property and casualty insurance will pay for your widget machine, but not for your inability to make widgets until the machine is back up and running.
- Health insurance - health benefits for your worker's health needs. Most often you will charge your employees part of the premiums in order to have health benefits.
- Life and disability insurance - insurance for the death or disability of key employees in the company, such as a partner. If your partner is disabled or killed, and the partnership is listed as the beneficiary on the policy (which in this case is the most common), then the business will be able to continue on and thrive after the partner is no longer able to contribute.
Scripted policies are the last kind of business insurance, and they are specialty insurance programs that are written specifically for a business or person. They insure the unusual and the unique.