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What Is Business Insurance?
Many states require businesses to purchase certain types of business insurance. Companies may choose to buy other types of insurance based on their structure, risks, and specific needs. An insurance agent can help you decide which coverages to purchase and guide you through the purchase, renewal, and claims processes as necessary.
Standard Business Insurance Policies
Property insurance compensates a business if the property used in the business is lost or damaged as the result of various types of common perils, such as fire or theft. Property insurance covers not just a building or structure but also what insurers refer to as personal property, meaning office furnishings, inventory, raw materials, machinery, computers and other items vital to a business’ operations.
Any enterprise can be sued. Customers may claim that the business caused them harm as the result of, for example, a defective product, an error in a service or disregard for another person’s property. Or a claimant may allege that the business created a hazardous environment.
Business Auto Insurance
A business auto policy provides coverage for autos owned by a business. The insurance pays any costs to third parties resulting from bodily injury or property damage for which the business is legally liable, up to the policy limits.
Workers’ Compensation Insurance
In all states but Texas an employer must have workers’ compensation insurance when there are more than a certain number of employees, varying from three to five, depending on the state. Workers’ comp insurance, as this coverage is generally called, pays for medical care and replaces a portion of lost wages for an employee who is injured in the course of employment, regardless of who was at fault for the injury.
Other Types of Business Coverages
Errors and Omissions Insurance/Professional Liability
Some businesses involve services such as giving advice, making recommendations, designing things, providing physical care or representing the needs of others, which can lead to being sued by customers, clients or patients claiming that the business’s failure to perform a job properly has injured them. Professional liability insurance protects the business from financial loss (up to the policy limits) as the result of these lawsuits.
Employment Practices Liability Insurance
Employment practices liability insurance covers (up to the policy limits) damages for which an employer is legally liable such as violating an employee’s civil or other legal rights. In addition to paying a judgment for which the insured is liable, it also provides legal defense costs, which can be substantial even when there has been no wrongdoing.
Directors and Officers Liability Insurance
Directors and officers liability insurance protects directors and officers of corporations or not-for-profit organizations if there is a lawsuit claiming they managed the business or organization without proper regard for the rights of others.
Key Employee Insurance
Life or disability income insurance can compensate a business when certain key employees die or become disabled. These coverages cushion some of the adverse financial impact that results from losing a key employee’s participation.
As the name implies, an umbrella liability policy provides coverage over and above a business’s other liability coverage. It is designed to protect against unusually high losses. It provides protection when the policy limits of one of the underlying policies have been used up.