Business insurance is a way of protection against potential financial loss. It’s a form of cost management, largely used to mitigate the risk of an uncertain or contingent monetary liability. For most people, business insurance isn’t something they particularly like to think about, but it should be.
There are two major types of business insurance that you should familiarize yourself with: business insurance for liability and commercial insurance for property. One of the biggest differences between these two is that liability coverage will only cover the risks you take, whereas commercial insurance covers a wide variety of potential risks. For instance, your small business might be sued because of someone stepping on your sidewalk if you’re not wearing a certain type of shoe. You can’t protect your small business in this way; you’ll have to get sued by someone else. With liability, you only have to worry about paying the other party damages.
Property insurance covers a number of possible situations, from damage or theft from your building to damage to a tenant’s personal property. If a tenant slips and falls on your property, you might be held liable for their injuries. If a tenant’s personal belongings are stolen from your commercial vehicle, you might be responsible for their loss. This applies to the mechanical aspects of your vehicles, as well as any outstanding loans that may be owed on them. For businesses, this type of insurance will typically cover any legal or potential claims as a result of accidents on or near the premises.
Professional liability insurance protects you from lawsuits that occur as a result of anything you do as a business. Common claims include negligence that harms the reputation of the company, such as breaking a customer’s window while cleaning or repairing the business. Damages awarded in cases such as these can be crippling to smaller businesses, forcing them to shut down and causing employee layoffs. To guard against such scenarios, professional liability insurance will likely pay for attorney fees and any settlement money that is awarded in court.
Commercial auto insurance is needed to cover the damages and injuries incurred in car-related accidents. Even if you only suffer minor scratches or scrapes, the cost of your vehicle could be more than your business profits. In addition to covering your own costs, business liability insurance will also cover those of the other drivers in your fleet. Many insurance companies offer discounts for customers who have more than one vehicle insured through them, so shop around and ask about deals!
Finally, many people fail to adequately plan for the unexpected, which leads to costly shocks. Businesses should always have an effective disaster plan in place before a disaster strikes. Not only will your plans help you survive with less disruption, but you will also minimize the amount of damage that occurs and the number of people who are hurt. There are plenty of risks involved with owning a business, but you can greatly reduce those risks by investing in the right insurance coverage.