Business insurance is an essential part of running a business.
No matter how well you plan and provide for the unexpected, sooner or later everyone is caught off guard. That is a universal truth and it applies to you, your family, your health, your home AND your business.
That is why being insured is so very important. Insurance will not prevent the unexpected from happening, but it will compensate you for your losses and help you to recover afterwards.
In business, your liabilities are widespread and you need to protect yourself against a host of contingencies. That is why business insurance is so important but also why it is so complicated.
It is not possible to have just one type of insurance to cover all possibilities. The policy would be far too huge and complex which would make it difficult to implement and also prone to dispute.
That is why insurance companies have come up with a range of specific policies designed to cover different aspects and issues of business activity. Which ones you should take depends on the type of business you are running.
For example, a normal home insurance policy will not cover any losses that are suffered by a business you may be operating from your home.
For that you will need a Home Business Insurance Policy. But if you run your business from a formal office outside the home, you will not need this kind of business insurance policy.
Many startup companies feel that business insurance is just an extra expense they cannot afford and is something they will consider once they are established and have more money.
This is a big mistake because disasters such as robbery, fire, major power outages, a key worker suddenly falling sick and so on, can affect a six-month-old business just as much as a six-year-old one.
There are eight major components to business insurance which you need to know about. Within each component there are options, riders, modifications etc. that can allow a policy to be tailored to your specific business needs.
- Workers Compensation – This is required by law. Every worker must be covered against medical expenses and loss of wages due to any injury or sickness resulting from the work he or she does.
- General Liability Insurance – This type of insurance protects you from any claims made due to injuries or loss resulting from use of your product or services. For example, it will protect you if someone slips and hurts himself in your restaurant. Or if someone gets hurt using a product you made.
- Business Interruption Insurance – This type of business insurance protects you from losses suffered by your business due to circumstances beyond your control. For example, if there is a strike that disrupts the shipping of your products, you will be compensated for the losses you suffer.
- Property and Casualty Insurance – This form of business insurance protects you from losses suffered through physical damage to your business. This would cover things like fire, flood, hurricanes and so on. The insurance will compensate you for the losses you have suffered and the medical treatment of those in your business, if they have been hurt.
- Life Insurance – This may seem out of place when we look at business insurance, but it is not. Banks often demand that the partners or owners of a business have life insurance so that if something should happen to them, the policies will cover repayment of any loans the bank has made.
- Auto Insurance – If your business owns vehicles or you provide cars to your employees, they must be insured against damage to them and damage or injury caused to others.
- Disability Insurance – This will cover loss of income if earning capacity is reduced due to injury sustained at work.
- Umbrella Insurance – This will protect you against issues not covered by other business insurance policies or if claims against you are higher than are covered by the other policies.
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