Business

7 Main Types of Business Insurance and How to Choose the Right Ones

7 Main Types of Business Insurance and How to Choose the Right Ones

Every company—large and small—needs business insurance. The right coverage can protect you from losses and the fallout from lawsuits against your business. 

If you don’t have adequate protection, you can end up with a significant financial burden. Sadly, many businesses go under every year due to incidents for which they didn’t have insurance. 

Various Policies for Different Business Risks

Rather than having one all-encompassing policy, business insurance companies offer various policies that address different business risks. That way, customers can purchase only the coverage they need. And should you need to prove you have coverage, you can get a Certificate of Insurance (COI) for each policy.  

Seven of the most common policies are:

  1. Company insurance. This policy protects employees financially if they’re injured or contract an illness while working. It can also provide a death benefit to the worker’s family in the event of a work-related fatality. 
  2. BOP. This kind of insurance offers defence along with coverage for the home or office you own or rent, as well as any equipment required to conduct your company.
  3. E&O insurance. In some industries, this type of coverage can protect you if a client sues your business over alleged mistakes in the professional advice or service you provide. It may be required to sign contracts with clients. 
  4. Business car insurance – If your business owns or rents cars for business purposes, your state probably requires you to have this policy. It protects you from liability lawsuits related to the operation of your vehicles and also covers damage to them. 
  5. Cyber insurance. If someone steals sensitive information from you and uses it to commit fraud or is likely to, this type of insurance can related to the theft (notifying customers, researching the breach, etc.). 
  6. Umbrella insurance. Like all insurance policies, liability policies have an upper limit on what they’ll pay for a covered incident. If you’re liable in a court case and the amount you owe exceeds your liability policy limit, an umbrella policy can pay the difference up to its limit.

Your business may need all the above policies or only a few, but you must have adequate financial protection.

How To Determine What Business Insurance Policies You Need

Getting the appropriate insurance coverage for your business is easier than you may think. It starts by finding a trustworthy insurance provider that makes it easy to get coverage. 

That means a company that meets several criteria, including:

  • It has extensive insurance industry experience.
  • It has an excellent credit rating, such as from AM Best. 
  • It has ample financial resources for paying claims. 
  • It enables you to get quotes, buy policies, report claims, and manage your policies online whenever it’s convenient. 

Once you’ve found the best company to meet your needs, you should read about its insurance products on its website. The information there should explain what the different policies cover, what types of businesses they’re appropriate for, etc. Still, you shouldn’t hesitate to talk with a company representative if you have any coverage questions.

Next, you should be able to get instant online quotes for the policies that interest you. Keep in mind that a reputable insurance company will allow you to customize a policy in a way that meets your needs. For example, by raising or lowering your policy limit and deductible, you can increase or decrease the amount you pay for coverage. 

The only caution is that if you increase your deductible to lower your monthly premium, you must have enough money set aside to cover the deductible should an incident occur. 

Get Coverage So You Can Focus on Your Business

You certainly don’t want to rush your business insurance decision. But once you know what you need and which insurance company you want to work with, you should purchase policies promptly for two reasons. First, you don’t want to delay your purchase and have an incident occur before you have coverage.  

Second, having policies in effect enables you to turn your attention to your business, confident that your insurance company will be there for you if the unexpected occurs. 

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