Running a business is a lot of work. In order to protect your company’s products, service, and legacy, insurance can be an essential asset. Rather than one type of insurance for business owners, there are a variety of options to choose from.
Below are 15 types of business insurance policies to think about getting for your business depending on your needs.
General Liability Insurance (GLI)
General Liability Insurance (GLI) is one of the core elements of business insurance and offers basic protection for you and your business. General insurance claims involving bodily injuries, defense costs, or property damage can be covered under GLI.
Most businesses are required to at least have liability insurance because it can protect you from lawsuits and claims from people outside of your company. With general liability insurance, you won’t receive an insurance payment but the other party will so it protects you from having to cover their expenses or replace their property.
Commercial Property Insurance
If you have a physical location, you may want to consider commercial property insurance. This type of insurance covers damage to the space you're renting or own and use to operate the business. Commercial property insurance is also called business hazard insurance and includes coverage for repairs as well as lost, stolen, or damaged items.
When you’re leasing space to do your business, the landlord will likely require this insurance. If you own the property, insurance may be optional. Another reason to consider commercial property insurance is if you have expensive equipment. If that equipment gets damaged and can’t get replaced right away, it could hurt the business quickly.
Business Income Insurance
Business Income Insurance is a unique type of property insurance that can help cover a company’s lost income if operations shut down. Business Income insurance often comes into play when a company loses income due to damage to its physical property. For example, if an essential piece of equipment gets damaged or broken and causes the business to halt production, this type of insurance could help replace a portion of the lost income.
Business income coverage can be used to help with mortgage and rent payments, employee wages, loan and tax payments, and more.
Professional Liability Insurance
Unfortunately, businesses can be sued even in the event of a mistake. If a company makes a mistake that results in a financial loss, negligence, or provides inaccurate advice, professional liability insurance can come in handy. This is often called Errors and Omissions (E&O) insurance. Even if you didn’t make a mistake, without this insurance, you could have to pay out of pocket for legal fees and more.
Professional liability insurance is helpful if your business offers a service to clients, deals with contracts, or regularly gives advice to customers and clients. Keep in mind that professional liability insurance doesn’t cover things like bodily injuries or property damage, data breaches, or work-related illnesses or injuries.
Workers’ Compensation Insurance
Also known as worker’s comp, Worker’s Compensation Insurance covers medical expenses and lost wages for a business owner if the employee becomes sick or gets injured. Coverage can also include rehabilitation services as well as death benefits.
This type of insurance is designed to help both workers and employers. Workers get coverage for medical costs as well as their financial needs if they get injured on the job. Meanwhile, companies reduce the risk of an employee suing them or suffering from a major financial loss if someone gets hurt while working. Workers’ Compensation Insurance only covers incidents that happen while the employee is actively working and/or clocked in.
Data Breach Insurance
If your business stores sensitive data, it could be at risk for a cyber attack. Data Breach Insurance provides coverage for lawsuits, loss of business, as well as settlements that could result from a data breach. This is important insurance to consider if your business processes payments or handles customer data in some capacity.
Cyber Liability Insurance
Cyber Liability Insurance is an add-on type of coverage that can protect you and your company if your data gets compromised. Cyber liability insurance covers your operational expenses along with costs that customers incur in the event of a data breach. This coverage can include: costs for recovering compromised data, repairing and improving damaged systems, forensic investigations, litigation expenses, business interruption and more.
Unfortunately, there are times when the data your business holds may be compromised. You don’t want the incident to ruin your business forever. This type of insurance can help you bounce back and develop stronger internal controls.
Commercial Umbrella Insurance
Liability insurance for businesses is a great start. However, in the event that you actually need to use the insurance, your costs may exceed the limits of your policy. Commercial Umbrella Insurance provides extra coverage for the things that your liability insurance may not cover. This includes legal costs, medical bills, damage to another person’s property, and judgments and settlements. This is a flexible type of insurance that can often be an add-on to your existing policy. Without it, you may have to pay out of pocket for whatever your business liability insurance doesn’t cover.
Commercial Auto Insurance
For businesses that have vehicles whether to transport goods or help employees provide a service, Commercial Auto Insurance is a must. This provides liability and physical damage coverage for cars, trucks, and vans that are used for the business. It’s a separate policy from the auto insurance that’s required for personal vehicles since work vehicles can be exposed to more risk. Commercial Auto Insurance protects your business by covering things like physical damage, medical payments, uninsured motorists, and more.
Product Liability Insurance
Product Liability Insurance protects businesses that sell products in the event that they malfunction or don’t work properly. Ideally, you want to create and source the best-quality products. However, mistakes and errors can happen. With product liability insurance, your business can be covered if a product happens to cause injury or damages to a third party. Determine your coverage amount by considering how many products you sell, your production capacity, and how many third-party companies are involved in the production.
Employment Practices Liability Insurance
Employment Practices Liability Insurance (EPLI) covers businesses against claims by workers regarding their legal rights as employees. It’s not uncommon for an employee to sue a business on the grounds that their legal rights have been violated in some way. Usually, larger corporations have a higher risk of facing an employee lawsuit but it can happen with smaller businesses too. EPLI can provide protection against lawsuits claiming discrimination, wrongful termination, sexual harassment, failure to employ or promote, wrongful discipline, and more.
Business Identity Insurance
Business Identity Insurance protects businesses from stolen funds and similar instances. Cyber thieves can get a hold of business accounts and business credit cards by using information like EIN numbers and state registration records. This can lead to thousands or even millions lost in company funds as well as personal funds. With Business Identity Insurance, you can get reimbursed for costs associated with investigating business identity theft as well as purchasing any monitoring or recovery tools. This insurance can help protect your legal tax liability as well and protect the business from debt that it didn’t actually incur.
Commercial Fleet Insurance
Commercial Fleet Insurance is very similar to commercial auto insurance although it can provide coverage for a company’s entire fleet of vehicles vs. individual policies per car. Sometimes commercial fleet insurance and commercial auto insurance are terms that get used interchangeably so be sure to thoroughly read through the coverage details early on. The most complete form of this coverage is comprehensive coverage for all company vehicles while the most basic form is liability.
Key Person Insurance
Key person insurance is a type of life insurance policy that a company purchases to cover the life of the owner, founder, top executive or another individual who’s essential to the business. The coverage can help provide financial support to the company in the unfortunate event that it loses a key person and business profits suffer as a direct result.
The death benefit of this insurance policy gives the company a financial cushion as the rest of the team works to recover and find a new person to fill such a critical role. Key personal insurance also provides peace of mind to the individual’s family that the business and their livelihood may not go under if they were no longer around. In turn, shareholders and their interests are also protected.
Home-Based Business Insurance
Home-based business insurance is tailored to people who operate a business out of their homes. Renter’s and homeowner’s insurance don’t cover business liabilities so this insurance provides necessary coverage in the event of legal fees or medical fees.
Consider home-based business insurance if you have customers, employees, or clients visiting your home or if you have supplies, inventory, or other products stored at home. Also, this insurance could be helpful if your home incurs damage that could potentially interrupt your business.
Legal fees, medical bills, and lost profits can lead to major hardships for any business. Obtaining the proper business insurance adds an extra layer of protection and financial support to keep things running smoothly. While you may not need every type of business insurance included in this list, it’s important to narrow down your needs and weigh your options to obtain the right level of coverage for your situation.
Start shopping around for the best insurance rates based on the business size, revenue, products and services offered, as well as potential areas of liability. These types of business insurance options can offer the peace of mind and financial backing the company needs.