Although businesses in the same industry largely face similar risks, business insurance needs may vary from one enterprise to another. Knowing what your business requires is the first step toward getting the right coverage. Here is a look at seven essential insurance policies that can protect your business from a potentially crushing loss:
Business property is at risk of damage from perils such as fire, natural disasters, and vandalism. Damage to high-value business assets such as expensive equipment can mean a crippling loss for your business. Commercial property insurance covers the cost of repair or replacement of damaged business property, including buildings.
Commercial auto insurance is essential if you have business vehicles. This coverage will protect your business from financial losses if any of your vehicles suffer damage from an accident or similar perils.
Provided you have employees in your business, you should have the right workersâ€™ compensation insurance. This policy covers employees financially in the event of work-related injuries or illnesses. Specifically, it pays for lost wages, treatment costs, rehabilitation costs, and funeral expenses. Take note that workers' comp laws vary by state, so, find out what your state requires of your business.
It is not easy for a business to recover after a peril. In fact, research shows that about 40% of the companies that suffer a natural disaster do not reopen again. However, if you have business interruption insurance, your business will have a higher chance of survival after the disaster. The policy will cover the income lost when you temporarily shut your business down due to a covered peril. It may cover additional costs such as relocation expenses in case you have to move your business elsewhere.
This policy covers liability costs that may arise if a third party sues your business for defective products. For instance, a client may sue your business for an injury they sustained from using your products. In such cases, product liability insurance will pay for costs such as legal expenses and compensation. This coverage is particularly crucial for businesses that deal with high-risk products such as pressure cookers, electric mats, medical devices, and pharmaceutical products.
This policy is also known as errors and omissions, and it covers the financial losses resulting from professional mistakes. For instance, if the professional advice you gave to a client doesn't yield the promised results, they may sue you, citing wrongful advice or negligence. Professional liability coverage will cover legal costs, compensation expenses, and any other liability costs that arise. This coverage is suitable for service-based businesses such as law firms and consultancy companies.
So long as you store confidential data for third parties, it would be best if you get cyber liability insurance. This is because, in case of a data breach, the affected parties will likely sue you. In recent years, the U.S. has witnessed a surge in cyberattack incidents. For example, in 2020 alone, more than 1000 data breaches were reported in the U.S. Therefore, ensure your cyber security measures are robust and up to date. For extra peace of mind, carry adequate cyber liability insurance.