What Is Business Insurance and Why Is It Needed?
Business insurance, also known as commercial insurance, helps protect business owners from unexpected losses. With the right types of insurance, you won’t have to pay out-of-pocket for costly damages or legal claims against your business. In some states, it may be required for companies to have specific types of business insurance.
What Does Business Insurance Cover?
Business insurance helps protect your business’ financial assets against risks and unexpected accidents that can occur during normal business operations. Typically, businesses get multiple types of coverages to ensure they’re fully prepared for unexpected losses. Business insurance can cover several different risks associated with your business operations, including:
- Employees: If an employee is injured on the job, workers’ compensation insurance can help cover their medical expenses and lost income while they recover.
- Property: Commercial property insurance helps protect your business’ owned or rented buildings, tools or equipment you use for business if they’re damaged or destroyed in a covered loss.
- Commercial vehicles: If you or your employees use vehicles for business reasons, commercial auto insurance can help cover the cost of an auto accident that happens on the job – regardless of who is at fault.
- Customers and clients: If a customer slips and falls in your business and files a lawsuit against your business, general liability insurance can help pay for their medical expenses.
What Isn’t Covered by Business Insurance?
Losses from certain types of natural disasters, floods and other major weather events may not be covered by standard commercial property insurance policies. The same applies for any customer property stored at your business. Things like intentional and fraudulent acts are not covered by standard professional liability policies. Standard general liability polices do not cover auto accidents – you would need commercial auto coverage for that.
Standard types of business insurance policies don’t cover everything, but it is possible to add coverage riders to standard policies to help cover additional risks.
