business insuranceBeing a business owner brings with it so much responsibility. Even if you’re working with a small team, you’re the one responsible for your employees, the products and services, property, and much more. That’s why purchasing the right business insurance is a crucial step for every owner.

To better understand the meaning of this insurance and learn more about what you need, I’ve prepared a list of some of the most important types of insurance coverages for your business.

My aim is to provide you with all the necessary information, including why you need this protection, how to choose the best policy, how to make a claim, and some standard terms you need to be familiar with.

Now, let’s find out which are some of the best companies that can provide good business policies and insurance to fit your needs.

Best Business Insurance Companies

Product Name 3 To 5 Features Best For Link To Product
State Farm
  • Numerous available agents at all times
  • Insure over 300 professions
  • Offer a full range of coverage
Best for all types of small businesses Get a Quote
Nationwide
  • Fortune 100 company with an A+ rating from A.M.
  • 14 industry specialties
  • Serves companies of all sizes
Best for business liability Get a Quote
The Hartford
  • Helped over 1 million businesses in the past 200 years
  • Cost-effective packages
  • Discounts for bundles
Best for commercial property Get a Quote

Why Do You Need Business Insurance?

Insuring your business is just as important as home insurance and health insurance. The main reason why you should get this insurance is to protect your business from losses.

There are so many things that can happen to your employees, to you, the property, and your clients. Imagine having an injured employee who does not have workers’ compensation insurance. That would be a nightmare!

None of us can predict the future, so it’s best to be cautious and keep everyone safe. Having great insurance will also attract more reliable employees who will stay long-term because they’re happy with what you’re offering.

It also makes you more credible in the eyes of potential clients. Getting quality insurance will indirectly attract clients who see how much you care about your business.

Business Insurance Glossary

There are several terms that you’ll often find when researching insurance policies for your business.

Aggregate Limit: Aggregate limit is a term that describes the maximum amount of coverage that your insurer can provide you, usually on an annual basis. Once you sign the policy, the insurer is contractually obliged to cover for claims that you’ll file that fall under that particular type of policy. However, there is a maximum amount the insurer can cover during a certain amount of time, which is, in most cases, one year.

Business Owner’s Policy (BOP): This is a common policy many business owners opt for. The Business Owner’s Policy is a combination of two types of insurance, general liability and commercial property insurance. It’s definitely a package that can save you some money since it’s usually cheaper to get compared to buying the two separately.

BOP can protect you from several types of damages and lawsuits, so it’s an excellent idea for both small and big businesses.

Deductible: A deductible is the amount of money your business will have to pay before your insurer covers the remaining cost. It is the part of the insurance claim that comes out of your pocket, and for some business policies, you can choose the deductible amount that’s as high or as low as you prefer it to be. If you opt for a lower deductible, chances are you’ll need to pay a higher premium.

Types Of Business Insurance

Although there are numerous insurance types for your business, I wanted to focus on the most important ones you have to consider. These policies will help you protect yourself as an employer, your employees, your property, and the business in general.

Workers’ Compensation Insurance

This is an insurance that is required by law in the USA. Employees are your biggest asset, so it’s really important that they are adequately protected. This government-mandated system varies from state to state, but the general structure is very similar.

A workers’ compensation insurance covers medical treatment for injuries resulting from the job, disabilities that happen as a result of the job, or portions of wages for employees who have suffered injuries while on the job.

There are certain exceptions, though, when a worker can be denied coverage. These are situations where the injury or damage was not caused as a result of their job—for example, when the worker quit or was laid off before the injury occurred, was under the influence of drugs or alcohol at the time of the injury, when the injury happened during a fight, and many more.

Property Insurance

Property insurance is another must, although it’s not required by law. This is insurance that will protect the business’ property and physical assets. It doesn’t matter where the company is located or whether you’re leasing or own this property.

It’s a great way to protect assets such as furniture, equipment, tools, signs, and more. Certain policies cover only the assets that are inside the property’s buildings, while others cover assets that are also located outside, on the grounds. Make sure you find a policy that works best for your business.

Also, most companies will cover your losses in case of theft and fire. However, mass events such as floods or hurricanes might not be a part of the policy.

General Liability Insurance

General liability is a type of insurance that covers costs for injuries and damages that your business might have caused. In other words, it protects you from claims that say your business caused a medical injury to someone, caused damage to another property, and more.

The general liability insurance will give you a sense of security and help you sleep better at night. If anyone wants to harm your business using defamation and false claims, this is the insurance that will prevent them from damaging your reputation.

Professional Liability / Errors & Omissions (E&O)

Professional liability insurance, also known as errors and omissions, protects your business from mistakes that you or anyone on your team may make while providing services.

For example, if one of your accountants mismanages a client, and the client loses money due to that mistake, you can be sued. The errors and omissions insurance can cover a part of the damages caused and the lawsuit, depending on your policy.

Life Insurance

Life insurance is essential for business owners, although many tend to forget about it. It protects you in the event of death and offers particular financial help for a beneficiary assigned by you. This is something that will help your business partners or loved ones during unfortunate times.

How To Choose The Right Policy

There is no secret formula that will help you choose the best business insurance. It all depends on the type of business you have, the size, number of employees, budget, property, and more.

First, take into consideration your risk. For example, if your business is located near a river or an area that is often flooded, that’s a policy you need to invest in. Also, think about the risks that often apply to the industry you’re in.

And don’t forget about the employees. They need adequate protection as well, especially if they do a high-risk job that is often related to injuries.

Next, you need to think about the budget and how much you can spend. That’s how you’ll decide whether you need a basic insurance plan or if you can upgrade it with other types of coverage.

On your part, the main thing is to do an in-depth analysis of the weaknesses and strengths of your business, protecting and ensuring the former.

Making A Claim

Knowing how to make a claim with business insurance companies is very important. The first thing to keep in mind is that you need to be protected before making a claim and have substantial evidence. Get all the applicable video footage, messages, and paper documents together, write down everything that happened, things that you remember, and collect any other forms of evidence that can prove your claim.

If there is a need to do so, call the police and file a report. They will also put all the evidence into the report, so you’ll be covered from a legal standpoint.

The following step is to talk with your insurance company or the broker you were in touch with previously, who is familiar with your policy. They will be able to give you more details about the steps to follow and what exactly you need to do.

FAQs

Is Business Insurance A Legal Requirement?

Legal requirements in the US vary from state to state. There isn’t a straight yes or no because it depends on the laws in the state where you’re running your business.

For example, all states do require you to have workers’ compensation insurance, but you need to check to make sure that you have all the right information, because rules can vary from location to location. You can do that online, so do it as soon as possible to know all the details.

Even when getting insurance for your business is not a legal requirement, it’s still a very smart thing to do. It’s a great way to protect yourself, your employees, and your finances.

Should I Get Two Separate Policies If I Have More Than One Business Location?

The thing about businesses with several locations is that different locations have different needs. It’s not a must, but getting two separate business policies for your two areas is definitely smart.

You need to review the differences between the locations, consider their surrounding areas, weather conditions, types of buildings, types of security, and more. Also, the type of work your employees will do at the second location might require higher coverage because perhaps they’re doing a more high-risk job.

There are many factors to consider; that’s why you should think about protecting your separate locations with different policies. This will offer the ultimate protection for your business while also covering all areas of loss.

What Insurance Do I Need For My Business?

This is a tough question to answer because, aside from the legally required policies, you’re the one who decides what insurance your business needs. As I mentioned, think about the risks that can be a threat to the business and include coverage for them in the policy.

Conclusion

Although getting these important business policies can seem costly at first, it’s what’s best for your business. It’s just a small price to pay to secure everyone involved in the business.

The key to finding the best policies is to get educated and talk to your insurance company of choice. I hope you’re more familiar with everything related to insuring your business after reading the article. You might even be ready to decide how much you want to invest in that coverage and what you want to insure, so it’s time to put everything you learned to use.

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