Types Of Business Insurance

You can purchase business insurance for nearly every operation and risk your business faces. In fact, there are many options available, for which we will briefly explain the coverage available to allow you to determine what type of coverage and protection you may need for your business.

Business insurance is a broad description that can be broken down into seven types of insurance policies:

Property Insurance

Property insurance covers a business's building and its contents -- money and securities, inventory, furniture, machinery, supplies and even intangible assets such as trademarks -- when damage, theft or loss occurs.

Property owners commonly purchase property insurance, which will allow them to replace a structure in the event that they experience a fire, earthquake, flood, or similar catastrophe.

Some insurance companies offer property insurance by named peril, such as fire and theft. Others offer policies that cover multiple perils. Most basic multiple-peril policies include losses caused by fire and theft, but business owners can purchase additional types of coverage if they need it. For example, a business in the Caribbean may consider a hurricane or earthquake coverage.

In an open peril property insurance policy, any form of damage, which is not specifically excluded in the policy, is covered. Named peril policies spell out a list of potential causes of damage, which are covered. Property insurance can be specialized, as in the case of earthquake, flood, fire, boiler, and theft insurance products.

Casualty Insurance

Casualty insurance covers losses and liabilities, which are a result of unforeseen accidents. This category of insurance is quite broad, encompassing a range of situations and fields within the insurance industry. Generally, casualty insurance excludes life, health, and fire insurance policies; it is designed for things like burglary, terrorist attacks, and fraud.

Typically, casualty insurance covers both damages to property and people. For example, if someone purchases a casualty insurance policy for a boat and someone is injured on board, the insurance company will bear that person's medical costs. Likewise, if part of the boat is damaged as a result of something like a burglary attempt, the insurance company will also cover this unforeseen event. This type of insurance is very useful for things like replacing broken plate glass or handling the aftermath of criminal acts.

Casualty insurance, which includes personal liability, can be very useful for business owners, as it ensures that the business will be able to take care of people who are injured on site. Homeowners can also take advantage of casualty insurance to help them replace items stolen during robberies, as can renters. A casualty insurance policy may also cover the people who visit a home, in the event of an accident.

Casualty insurance also includes certain types of bonds or other limited insurance that have been long standing products and may be very necessary to your business.

Employee Theft and Dishonesty:
This coverage protects your business from loss or damage caused by employee theft. If your employees have access to company funds or handle cash transactions you may want to consider this coverage for the employees.

Surety Bonds:
This form of casualty coverage referred to as a bond, insures someone you will contract with that you will complete the contract. If you are in construction or plan on bidding for government jobs, then you will be required to obtain a surety bond to insure your work.

Liability Insurance

Liability insurance insures against liability legally imposed upon your business because of the negligence of the business or its employees. Put another way, it protects your business when the business is sued for negligence. 

Type of liability insurance:

• Directors and Officers Liability,
• Employers’ Liability, and
• Professional Liability

Directors and Officers liability is intended to cover the acts or omissions of those in the director or officer position. An entire company should not be held liable for the statements, actions, failure to act, or other mistakes that are the responsibility of an officer or director.

Employers’ liability is also known as workmen's compensation, this is a mandatory form of liability insurance coverage that all businesses must carry. While it sounds like it is intended to protect the employee, which it does to some degree, it is actually protection for the employer in case of injury, job related illness, or other damages for which the employee might sue the company.

Professional liability is similar to malpractice insurance, although the coverage may not be as comprehensive as some malpractice policies in different fields. The purpose for professional liability insurance is to protect those seen as professionals or "experts" in a given field, who may not be protected by general liability due to their expertise. When one is seen as a professional, he is held to a higher standard and is therefore often considered to hold greater liability towards his clients.

Commercial Auto

Your personal automobile policy does NOT cover vehicles used by your business. If your business uses vehicles, then you need a commercial auto policy. Commercial auto coverage insures against property damage to vehicles and damage caused to others by those vehicles.

Business Interruption

Business interruption insurance is an insurance product, which insures businesses against losses incurred when they have to close as a result of a named peril such as fire or flooding. It is purchased as an addition to an existing insurance policy, and there are several types of business interruption insurance available. This insurance product can be a very sound investment for a business. While most businesses would not operate without, for example, fire insurance, they might not think about what would happen if they had to close temporarily because of a fire, and business interruption insurance is designed to cover this.

Health Insurance

To be competitive, most businesses need to offer their workers health insurance. This insurance offers a health coverage benefit to your employees (and you).

Life And Disability Insurance

Life and disability insurance protects the business against the death or disability of key employees. For example, one partner carries a life insurance policy naming the partnership as a beneficiary. If that partner dies, and the business has planned properly, the proceeds of the policy can be used by the business to buy out the share of the decedent's partnership interest from the estate.