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How to Choose The Right Types of Business Insurance

How to Choose the Right Types of Business Insurance

Call (800) 641-7488 to speak with a live representative

types of business insurance

How To Choose The Right Types Of Business Insurance Based On Size And Industry

When you begin a small business, the last thing on your mind is lawsuits.

You’re dreaming of making your mark. You want to provide a product or service that will both help people and make a living.

Yet, if you do not insure your business, you may see your dreams go up in smoke. How do you know what types of business insurance you need? Keep reading to learn more. 


Required Types of Business Insurance

If you do not understand what insurance you need, you will find yourself insurance poor. Before you begin to look at specialty policies, start with the required policies.  


Worker’s Comp Insurance 

Most states require worker’s compensation insurance. Research your state and its requirements. Learn if you are bound legally to carry it. 

Worker’s compensation will pay for the medical care of an employee injured on the job. It will also pay the wages of the employee who cannot work because he was hurt on the job. 

If the employee’s injuries are his own fault, the worker’s comp insurance will payout. 

Worker’s compensation will also pay a family if their loved one dies on the job at your business.  

You may not live in a state that requires worker’s comp insurance. Even if that’s the case, carry it. It will protect your employees and make your company a better place to work. 


Unemployment Insurance 

The U.S. government requires all businesses to carry unemployment insurance. This insurance will cover employees who lose their job even if they’re fired. 

You may not purchase unemployment insurance from an insurance company. Instead, you pay for unemployment insurance with your payroll taxes.

Unemployment tax is also known as “federal unemployment” or “state unemployment” tax. Your business will pay a specific amount depending on how many people you employ.  

Use human resource software and payroll services to pay this tax. You can also calculate it yourself, but the software and service make the process easier. If you have employees, you need unemployment insurance. 


Disability Insurance

Some states require disability insurance. Disability insurance will pay employees who cannot work because of illness or injury. If the employee’s illness or injury comes from something outside of work, disability insurance still pays out.  

Thus if you have disability insurance, it may cover any pregnant women who must leave work for maternity leave. 

Disability insurance typically covers employees for three to six months after an injury or illness.

Even if your state does not require it, many businesses get short-term disability because of the peace of mind it offers to employees. 

You can also buy long-term disability. It will typically run the duration of the policy. 


Types of Business Insurance That Makes Sense

Some business insurance policies make sense, especially if you are running a business that has unique services. 


General Liability Insurance 

All businesses should carry general liability insurance

You can find yourself insurance poor when you purchase too much insurance. But if you do not have general liability insurance, you expose your business to many problems. 

General liability will protect your company if a third party is hurt on your business’s property. If a person sustains an injury as a result of your business’s products or services, general liability covers you.

Coverage includes physical injuries and property damage. It even covers advertising injuries such as slander and libel. 

If you own a business with high physical risks, look into general liability insurance.  Construction companies, landscaping businesses, and manufacturing companies all need general liability insurance. 


Commercial Property Insurance 

Commercial property insurance protects your property. This includes the building that houses your business and its contents. A commercial property insurance policy will protect your inventory and your equipment in your building. 

So if you have a bakery, for example, commercial property insurance will replace your expensive industrial mixer should you lose it in a fire. 

Commercial property insurance will typically cover theft, fires, vandalism, or weather-related damage.

You can also add a rider for business interruption. For example, if your business burns down, you cannot conduct business until you have a new building. Commercial property insurance can pay you the lost wages while you rebuild. 

If you run a business that handles customer data, you should also look into an add on for cyber insurance


Commercial Auto

If your business uses any sort of vehicle for business purposes, you should have a commercial auto policy. This will cover bodily injury or property damage that your vehicle may cause.

Your personal auto coverage may not cover damages on your car when you’re conducting business.

A commercial auto policy can also pay to replace a vehicle involved in the accident


Professional Liability Insurance

Professional liability is also known as error and omission liability or malpractice insurance. Businesses that give professional advice, make recommendations, or design products need professional liability insurance.

If a patient sues you for faulty advice or a poor recommendation, professional liability will cover your legal expenses.

In short, professional liability protects you from errors in judgment. It also pays for legal expenses up to the policy limits. 


Product Liability Insurance

If you sell a tangible product, product liability insurance will protect you. 

If you’re using a third party manufacturer or packaging company, the customer will not sue them. He will still sue you.

Product liability will cover the entire life cycle, including manufacturing and packaging. Product liability will protect you from someone else’s mistakes. 


Employment Practices Liability Insurance

Employment practices liability will protect you from employment discrimination or wrongful termination claims. If one of your employees attempts to sue you for discrimination, this type of insurance will pay for your legal fees.

We all want to conduct business with fair practices. But we still need protection from sexual harassment or racial discrimination claims.  


Protect Your Business

As you consider these various types of business insurance, examine your company carefully. Understand your personal and professional liability. Then buy the insurance that makes the most sense for your company. 

For all your insurance needs, contact us. 

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