Insurance Basics: What Is Business Insurance?

Business insurance protects a company’s financial assets, intellectual property, physical property and liability from a covered loss. There are many risks that a business is susceptible to, including fire, theft, lawsuits, property damage, injuries, loss of income and more. If your office is hit hard by a storm or a fire, for instance, there will be business interruption, against which you can be covered with the right business insurance plan.

There are many forms of business insurance but the most common ones are commercial liability, commercial property, commercial auto and workers’ compensation. Other coverages that are popular with small and mid-size businesses include business owner’s policy, business income insurance, commercial flood insurance, commercial umbrella insurance, data breach insurance, employment practices liability insurance, home-based business insurance, marine insurance, multinational insurance, professional liability insurance, risk engineering insurance, surety and fidelity bonds and management liability insurance.

It takes a dedicated and knowledgeable agent to customize the right insurance plan for your needs. The amount of coverage your business needs depends on the size and location of your business and the type of industry you’re in. At minimum, most businesses have liability and property insurance as well as workers’ compensation coverage.

Without the proper insurance, your business may be held responsible for legal fees, settlement fees or judgments out of pocket. Some types of insurance, like workers’ compensation, are mandatory in many states. So are unemployment insurance and disability insurance. Your rate for these coverages is set by the state your business is located in. Factors that determine this rate include the risks posed at and by the business, your business’s claims history and the size of your business.

Natural disasters have been known to destroy the majority of small businesses that never reopened. One vicious storm can result in significant and overwhelming property damage, damage to equipment and documents and more. Vandalism may also leave your business inoperable for a period of time. With the right kind of business insurance, you’d be covered for that type of business interruption.

A business owner’s policy (BOP) is a type of policy that combines general liability, property insurance and business interruption insurance, which covers the loss of income from a fire or other catastrophe that interrupts the regular operations of your business. This type of policy is cheaper than buying each component separately.

Many business owners also elect to buy employment practices liability (EPL) insurance in case an employee makes a claim against the business. Commercial auto insurance is also very popular, whether you use one car for business reasons or if you own a business fleet of vehicles that are part of your business operations.

Business insurance rates differ widely based on state. Add-ons also add to the cost of business insurance. Additional coverages include professional liability insurance, which can help your business in the event of errors in professional services.

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