Failure to have adequate business insurance coverage can have catastrophic ramifications under a wide number of circumstances, including lawsuits, employee injuries, and disasters.  The specific business insurance coverage required depends on the type of business and the way it is structured. And there is a wide array of business insurance coverage options.

There are certain basic types of insurance coverages that most small businesses need including property insurance, liability insurance, workers’ compensation and others.  The amount of business insurance coverage necessary will vary depending on the nature of your business.

Property Insurance

Business property insurance is a business insurance coverage designed to protect against perils such as fire or theft.  If you have a home business, you may think that your home insurance policy will provide the business insurance coverage you need.  However, most home insurance policies do not cover structures from which business is conducted.

Business property insurance compensates the business for buildings and other structures lost or damaged and also for property like furnishings, raw materials used in manufacturing, office machines, computer systems, inventories and other company assets.  In some situations, it will also provide the money necessary to keep a business in operation while repairs are being made after a covered loss.

Liability Insurance

Another type of business insurance coverage is liability insurance.  In today’s business world liability insurance is very important since lawsuits are so prevalent.  This type of business insurance coverage protects the business owner against claims where the business is legally responsible for injury resulting from a defective product or lack of care that should have been exercised to protect another person or property.

Claims of errors in service resulting in real or perceived losses, or accusations that the business (including its principals) is responsible for creating a hazardous environment that places others at risk are also part of this business insurance coverage.  Liability insurance will also pay for medical bills accrued by others injured by the business.

Workers’ Compensation

Businesses with more than three to five employees are required by law in every state except Texas to carry workers’ compensation coverage. This business insurance coverage is designed to cover the medical costs and some portion of lost wages incurred by an employee injured on the job.  It is a no-fault business insurance coverage and applies regardless of who was responsible for the injury.  It also will compensate an employee’s family in the case of death. Many workers’ compensation policies also include return-to-work programs that will provide rehabilitation services to injured employees to help expedite the recovery process.

Commercial Auto Insurance

Many businesses own automobiles, trucks, vans and other vehicles that are used in the business operations.  Needless to say, these vehicles should have adequate business insurance coverage.  A commercial auto policy also provides business insurance coverage for personal vehicles used for business purposes, where the owner’s personal auto insurance may exclude it.

Package Policy

Another business insurance coverage option is a business owner’s policy.  Business owner’s policy packages include property insurance, liability insurance and other business insurance coverages in a single policy crafted to be useful to most small businesses.  Business owner’s policies also include income insurance to compensate the company for losses incurred due to disasters like hurricanes, floods and other catastrophes. Only small to medium-sized businesses are normally eligible for this business insurance coverage.

What Makes Sense for Your Business?

There’s not a cookie-cutter solution when it comes to business insurance coverage.  Your business insurance coverage needs are unique. A business owner’s policy may make sense for you, or you may be better served putting together a customized business insurance coverage plan.  Either way, it’s imperative to protect what you’ve worked so hard to create with a business insurance policy.  Get great business insurance coverage by comparing multiple business insurance quotes at M Squared.