Insurance is a lot like the weather—you can’t control it, but you should prepare for it. Business insurance is no different. You may not be able to control when an accident happens or if your property is damaged, but you can protect yourself with the right type of coverage. Understanding what business insurance entails and how much it would cost will help you determine whether or not it’s worth investing in. Here’s everything you need to know about business insurance:
What is Business Insurance?
Business insurance is a policy that protects you from financial loss. It covers the value of your business assets, it protects you and your employees and it covers business operations.
So, let’s say that you run a plumbing company and one day one of your employees accidentally breaks the sink in one of the bathrooms at a customer’s house when he misses with his wrench. The customer complains to you about it and asks for compensation. You want to make sure that there is no bad blood between either party so you pay for the damage out of pocket because this was an accident on behalf of both parties: the employee who broke it, as well as yourself (for hiring him). This incident occurred during normal operations though, so now what?
In order to protect yourself from having something like this happen again—which would affect not just yourself but also all other customers’ perception of your company—you decide to purchase some basic liability coverage with an insurance provider; this will cover any damages up until $1 Millions Dollars per claim per year, should another similar incident occur in future years while operating under standard conditions (i.e., no negligence).
What Does Business Insurance Cover?
Most people know that business insurance protects your business assets from a wide range of mishaps or disasters. But what is it exactly?
Business insurance is a type of coverage that provides financial protection for the losses suffered by businesses and other organizations, as well as their respective owners, employees and/or property. The purpose of business insurance is to safeguard against financial loss in case something goes wrong with your company operations.
There are many different types of business insurance. They include:
- Property coverage, which pays for damages when assets are destroyed due to fire or wind damage
- General liability coverage, which protects against injuries sustained while on your premises (e.g., slipping on a wet floor)
- Commercial auto liability/coverage, which covers any vehicles you use for business purposes such as delivery trucks
Why Do I Need Business Insurance?
You should consider business insurance if you’re running a small business. Business insurance can protect your company from losing money as a result of unforeseen events and lawsuits, damage to property, and in the case of an employee causing harm to someone else.
Business owners who are looking for new coverage or want to make sure they have the right amount of coverage may want to talk with an experienced independent insurance agent about their options.
How Much Does Business Insurance Cost?
There are a variety of factors that impact the cost of your business insurance. These include:
- The type of policy you choose. There are many types of insurance policies for businesses to choose from, including general liability, product liability and workers’ compensation insurance.
- The size of your company. Businesses with larger payrolls or more assets will have higher premiums than smaller businesses.
- The industry you operate in and its associated risks (e.g., construction work exposes you to higher rates than food services).
In general, expect to pay between $1,000 and $2,000 per year for a small startup company with no employees but plenty of cash flow—dependent upon whether it’s an LLC or S corporation entity type—and up to two times that amount if you’re working on a big project like building an apartment complex or mall where there will likely be more accidents occurring on site due to heavy machinery being used by different subcontractors working together under one roof without proper safety measures being taken into account during construction activity.”
What Are the Different Types of Business Insurance?
There are many types of business insurance. The following is a list of some of the most common ones:
- General liability insurance protects your business from claims related to bodily injury or property damage.
- Professional liability insurance protects you from claims that arise out of injuries caused by professional negligence, such as legal malpractice or medical malpractice in the case of doctors and other healthcare practitioners, architects, engineers and attorneys.
- Workers’ compensation insurance helps pay for medical treatment and replaces lost wages if an employee becomes injured on the job.
- Property insurance covers damage to company-owned property as well as non-owned property (sometimes called “business interruption”). If someone slips on water leaking from your roof into their home below yours at night while they’re sleeping there’s coverage for that too—it’s not just limited to employees who are hurt at work!
- Commercial auto insurance covers bodily injury liability in accidents involving automobiles owned by businesses (as opposed to personal cars driven by employees).
General Liability Insurance
The definition of General Liability Insurance is: “a policy that provides coverage for legal liability arising out of claims by third parties who may be injured or suffer property damage as a result of your business operations.” This type of policy is required in most states and can help protect your personal assets if someone else sues you because they were injured or their property was damaged while on your premises. It also covers legal costs related to defending yourself in such suits.
For example, consider an event at which a guest suffers injury due to falling on steps outside your store front. If they sue you, this is what general liability insurance would cover:
- The cost of defending yourself against the lawsuit;
- The cost of paying any judgment awarded against you (up to the stated limit); and/or
- The cost of indemnifying another party against loss (up to the stated limit).
Professional Liability Insurance
Professional liability insurance is a type of coverage that protects you in the event that someone sues you for damages they believe were caused by your professional services.
Professional liability insurance covers a variety of situations, including:
- Medical malpractice
- Legal issues involving negligence or error on your part
- Intellectual property (like copyright or patent infringement)
Workers’ Compensation Insurance
Businesses with employees are required to carry workers’ compensation insurance. Workers’ compensation is a form of insurance that protects employees against job-related injuries or illnesses. This type of coverage is mandatory in all states, and it is not required for businesses that have no employees.
Property insurance covers physical damage to your building or other property. This can include loss of income, theft, vandalism and other damage. Property insurance does not cover the cost of replacing lost or damaged equipment or machinery within your business; that’s handled by business interruption coverage.
Property insurance can be purchased on a per-event basis (e.g., if something happens in one location) or on a yearly basis (e.g., if you have multiple locations). If you own rental property, this coverage will help repair any damage done by a tenant’s actions while they were living in the unit(s).
Commercial Auto Insurance
Commercial auto insurance is a type of insurance that covers vehicles used for business purposes. If you own a car or truck and use it for business purposes, then you need commercial auto insurance. This type of coverage protects your vehicle from accidents involving other drivers and from damage caused by collisions, theft, vandalism or natural disasters such as hail storms.
Commercial auto insurance also provides liability protection when your vehicle causes an accident with another driver or damages another vehicle in a parking lot. The policy will pay for medical bills associated with injuries sustained by other people in the accident as well as property damage to their vehicles that result from an accident involving your vehicle (the third party).
This post has provided you with some useful tips and suggestions on how to protect yourself from running your own business. You should now be better equipped to make an informed decision about whether or not insurance is right for your individual income from running a business. We hope that this article has helped clear up any confusion about what types of coverage are available, who should consider purchasing them, and how much it all costs!