Choosing from 7 Appropriate Business Coverages

Insuring your business is an important step in securing your financial future; not to mention, it's often required by law and/or the landlord of the building that houses your business. The purpose of insurance is to transfer an affordable risk (non-reimbursable premium payments) to cover an unaffordable risk, such as damages and theft. You know you need business insurance, but which policies and how much coverage do you need? The main types of policies businesses pursue are:

1. Commercial property insurance: Covers insured parties who suffer a financial loss because property has been damaged, destroyed or stolen. The coverage extends to buildings, furniture, equipment, computers and hardware, inventory, raw materials etc.
2. Commercial liability insurance: Covers third parties who suffer a bodily injury or property damage in instances when the insured is found legally responsible. The coverage extends to medical expenses, accidental fires or injuries, legal fees etc.
3. Errors and omissions insurance: Covers insured parties in the event of a lawsuit filed by a customer claiming an error or omission in work performed by the insured. Professions at risk of E&O liability include engineers, realtors, lawyers, consultants, doctors etc.
4. Commercial auto insurance: Similar to personal auto insurance, this policy covers vehicles used for business purposes. Coverage types include collision, liability and comprehensive.
5. Commercial umbrella insurance: Extends coverage beyond policy limits to protect against claimable events resulting in very high expenses.
6. Workers compensation: Required in most states, this policy covers workers inflicted by bodily injury or illness on the job. The coverage extends to medical expenses, lost wage replacement and payouts to families of workers who die as a result of performing their job.
7. Employee benefits: Businesses should invest in the wellness of their employees, but apart from compassion, businesses with more than 50 employees must offer affordable healthcare by next year. Small businesses who choose to offer employee healthcare will be rewarded with tax credits to help offset the cost.

Policies vary between different insurers. An independent agent can help you select the policies that offer the right amount of coverage for the right price. Keep in mind, you may not wish to opt for the cheapest policy; instead select the policy that will offer a sufficient amount of coverage to support your business’ needs. The additional premium costs are often affordable and well worthwhile in today's litigious environment.