Business insurance, which is also called “commercial insurance,” protects companies from losing money when things like lawsuits, natural disasters, or accidents happen while they are running their normal business. Businesses can get different kinds of commercial insurance to cover things like property damage, legal liability, and risks related to employees.
How it works
Small business owners need to carefully think about and evaluate their risks because if their business fails, they could lose personal funds. Commercial insurance protects business owners from losses they might suffer because of unplanned events that they could not pay for on their own. This lets businesses run when it would be too risky for them to do so otherwise.
Types of business insurance
There are many different types of commercial insurance available, but some of the most common include:
- Commercial General Liability Insurance: It is a type of plan that every business needs. People call it “comprehensive insurance,” but it doesn’t cover all risks. General liability covers harm to people or damage to their property, medical bills, libel and slander, lawsuit defence, and settlement bonds or judgements.
- Professional Liability Insurance: It is made for companies that offer services. Loss that was caused by the service is covered. It protects against costs that come up because of malpractice, negligence, or mistakes.
- Commercial Property Insurance: It’s made for companies that have a lot of physical property, like equipment, signs, inventory, furniture, and so on. It keeps the business from losing money in case of a fire, storm, or theft. For instance, property insurance can pay for damage to inventory, computers, furniture, signs, or advertising materials.
- Home-Based Businesses: People who run businesses from home will probably need extra insurance for their inventory and equipment. Commercial property insurance usually covers businesses, but most homeowner’s policies don’t cover home-based businesses. A home-based business insurance rider can be added to a homeowner’s policy to cover some equipment and liability.
- Product Liability Insurance: Manufacturers, wholesale distributors, and retailers are some of the types of businesses that can use it. Product liability insurance shields a company from the costs connected with harm or injury caused by products, like a broken product hurting someone. A company might have to pay for expensive lawsuits if it doesn’t have product liability insurance.
- Vehicle Insurance: It is important to have insurance on any business vehicles. Insurance is needed in case of damage to the vehicles or cargo, or if someone gets hurt. This is true whether you have vans, buses, tractor trailers, or passenger cars. Each state has a minimum amount of insurance that everyone must have. What kind of driving record the driver has and how good the cars are can all affect how much car insurance costs.
- Business Interruption Insurance: When things happen that stop a business from running normally, business interruption insurance pays the company back for the money it lost. Many people get it as an extra on their property insurance or as part of their business owner’s insurance.
Overall, business insurance can be very helpful because it protects a company from losing money because of things that don’t go as planned. Look at a few different business insurance plans and make sure you fully understand the terms of each one before you buy it. If you want to find the best policy for your business, you might want to talk to a professional financial advisor.