- 1 Overview
- 2 Types of business insurance
- 2.1 Liability Insurance
- 2.2 Property insurance
- 2.3 Business interruption insurance
- 2.4 Professional Indemnity insurance
- 2.5 "Key Man" or "Key Person" insurance
- 2.6 Unemployment insurance
- 2.7 Automobile insurance
- 2.8 Office and director insurance
- 2.9 Home office insurance
- 2.10 Workers' compensation insurance
- 3 External links
- 4 See Also
Many types of Insurance are purchased by small businesses to protect themselves from a wide variety of risks. Other types of insurance are purchased by small businesses to protect their employees from certain types of risks. These types of insurance are sometimes provided to employees as a benefit of employment.
Like home insurance, business insurance protects the contents of your business against fire, theft and other losses. To learn about the specific types of insurance coverage that is required for businesses in a specific area, contact your insurance agent or broker. It is prudent for any business to purchase a number of basic types of insurance. Some types of coverage are required by law, others simply make good business sense.
Types of business insurance
The types of insurance listed below are among the most commonly used and are merely a starting point for evaluating the needs of your business.
Businesses may incur various forms of liability in conducting their normal activities. One of the most common types is product liability, which may be incurred when a customer suffers harm from using the business product.There are many other types of liability, which are frequently related to specific industries. Liability law is constantly changing. An analysis of your liability insurance needs by a competent professional is vital in determining an adequate and appropriate level of protection for your business.
There are many different types of property insurance and levels of coverage available. It is important to determine the property you need to insure for the continuation of your business and the level of insurance you need to replace or rebuild. You must also understand the terms of the insurance, including any limitations or waivers of coverage.
Business interruption insurance
While property insurance may pay enough to replace damaged or destroyed equipment or buildings, how will you pay costs such as taxes, utilities and other continuing expenses during the period between when the damage occurs and when the property is replaced? Business Interruption (or "business income") insurance can provide sufficient funds to pay your fixed expenses during a period of time when your business is not operational.
Professional Indemnity insurance
If your business provides knowledge, advice or the sale of skills, professional indemnity gives cover against claims of negligence, breach of confidentiality and other related accusations.
"Key Man" or "Key Person" insurance
If an individual is so critical to the operation of a business that it cannot continue in the event of your illness or death, you should consider "key man" or "key person" insurance. This type of policy is frequently required by banks or government loan programs. It also can be used to provide continuity in operations during a period of ownership transition caused by the death or incapacitation of an owner or other "key" employee.
In the U.S., unemployment insurance refers to programs administered under the Federal-State Unemployment Insurance Program that provide unemployment benefits to eligible workers who are unemployed through no fault of their own (as determined under State law), and meet other eligibility requirements of State law. Unemployment insurance payments are intended to provide temporary financial assistance to unemployed workers who meet the requirements of State law.
It is obvious that a vehicle owned by your business should be insured for both liability and replacement purposes. What is less obvious is that you may need special insurance (called "non-owned automobile coverage") if you use your personal vehicle on company business. This policy covers the business' liability for any damage which may result for such usage.
Office and director insurance
Under some circumstances, officers and directors of a corporation may become personally liable for their actions on behalf of the company. This type of policy covers this liability.
Home office insurance
If you are establishing an office in your home, it is a good idea to contact your homeowners' insurance company to update your policy to include coverage for office equipment. This coverage is not automatically included in a standard homeowner's policy.
Workers' compensation insurance
Workers' compensation insurance, sometimes called workers comp, protects a business owner from claims by employees who experience a work-related injury or illness – either sustained on business premises or due to business operations. In all states, most companies are required to carry workers’ compensation insurance for their employees. You will need a separate workers' compensation policy for this type of coverage. Each state has an agency that provides information and guidance about the workers compensation coverage required in the state.
- Independent Insurance Agents & Brokers of America - national association of independent insurance agents & brokers. Website includes guides to terms and products, along with tools to find independent insurance agents.
- Insure U - A small business web resource maintained by the National Association of Insurance Commissioners.
- Insurance Tips & Resources - A place where people can learn about different types of insurance products, how to get discounts, get company bios and more.
- Insurance Information Institute - Provides information to consumers and agents on insurance.
- A.M. Best Ratings - Insurance company rating site.
- Insurance Brokrs - Insurance related site with insurance articles and database of U.S. based insurance agents.
- Insurance Agents Search Engine - Resource for finding insurance agents based on location, company, and/or insurance type.
- Employee benefits - Includes a listing of the types of insurance coverage that may be provided to employees.
- Insurance Hub
- Starting a Business Hub