There are plenty of different types of insurance that businesses can open, and each one provides different benefits. Knowing which of those benefits each insurance provides is critical for taking out a policy that protects each company.
To make it easier for business owners to understand the key types of business insurance, it’s important to look into a few different types of policies. Here are nine essential types of business insurance.
1. General Liability Insurance
The first major type of business insurance is general liability insurance. This type of insurance is necessary for every company, no matter what type of business an individual is running.
For the most part, general liability insurance costs between $500 and $3,000 a year. Although that cost may seem high at first, it’s far lower than what a business would pay if they wound up the victim of a liability claim.
General liability insurance provides protection for bodily injury, property damage, third-party accidents, and several other situations. It’s important for any business to take out these policies to stay safe in many legal situations.
2. Product Liability Insurance
Anyone running a company that sells, manufactures, or distributes products needs to have product liability insurance. That’s because this type of insurance keeps the business safe if product defects cause financial losses.
Since defects are pretty common in the world of manufacturing, it’s not uncommon for businesses to have to recall products. This can lead to a huge loss of revenue if they’re not protected by product insurance.
3. Professional Liability Insurance
Just like how there’s product liability insurance for individuals who work with products, there are insurance policies for businesses that work with customers. This type of insurance is called professional liability insurance.
Professional liability insurance protects against errors, negligence, and malpractice claims. This type of insurance also keeps businesses safe against misleading product information claims.
4. Commercial Property Insurance
Most businesses are run out of commercial property, and most of the time those commercial properties are quite expensive. To protect that expense, it’s important to take out a commercial property insurance policy.
This type of insurance policy protects business owners from fire, weather, vandalism, and accidents that take place on their property. It’s a type of insurance that’s a must-have for anyone running a business from a commercial property.
5. Home-Based Business Insurance
For business owners that run their companies out of a home office, there are insurance policies for them, too. After all, they won’t need commercial property insurance, but may still want to protect their assets.
With this insurance policy, they’ll receive specific protections that cover damage to their home property. And, they help provide insurance coverage for any business liability for the home-based company.
6. Workers’ Compensation
Workers’ compensation policies are necessary for just about any kind of business. These policies protect companies if an employee gets hurt on the job. The policies cover benefits, wage replacement, and medical expenses when these issues arise.
7. Directors and Officers Insurance
This kind of liability insurance is designed to protect those who are directors or officers of an organization. The policy protects officers and directors against personal losses from any claims that are brought against them.
The insurance policy also protects company directors in the event that they give unsatisfactory service or advice to clients. It allows them to steer clear of legal proceedings for these issues and to stay protected.
8. Life Insurance
Most companies outlive their owners by quite a few years, meaning that it’s important for business owners to insure their company after they’re gone. That way, they know that their legacy is being passed on to the right individuals.
To set up this type of protection, you can take out a life insurance policy. This insurance provides monetary payouts to the company and to family members so that they can continue benefiting from the business after your death.
9. Business Income Insurance
Business income insurance, also known as business interruption insurance, is a type of insurance that helps protect companies when they’re not able to operate due to damage caused by a fire, theft, or storm.
With this insurance, business owners receive a payout in the event that they have little or no revenue so that they can continue to pay their operating expenses until they’re able to reopen.