Business Insurance Explained in Detail

0
162

Leading a business is always about risks. The variety of risks is huge and must not be underestimated, as a simple lawsuit or equipment damage may result in unexpected and unbearable loss and eventually – to the business failure. Financial loses, loses related to tax issues, business auto accidents and countless other risks are could be covered by insurance companies to bring a business owner the piece or mind and financial protection in a case of sudden troubles. Even if you run a small business it is always better to stay protected by your Insurance policy so you will never find yourself in a position of being unable to cope with legal circumstances and expenses.

There are several types of Business Insurances which cover specific risks. Here is the list of the most common Business risks and types of Insurances in the USA according to official statistics:    

General Business Insurance 

 

General Business Insurance 

This type of insurance is often called Commercial Liability Insurance and purposed to cover general business risks of a broad nature. This type of insurance is very common as it protects the business from quite a serious law and medical expenses related to injuries (third parties injuries), premises’ content damage or damage caused by your Company’s services or products.

It’s important to know that General Business Insurance does not cover several essential types of risks, such as:

Business Interruption Insurance

Business Interruption Insurance 

This type of Insurance is designed to protect main business’ operational processes and money turnover in a case of disaster. If unforeseen disastrous circumstances have happened and caused the interruption of normal daily business routine, the Business Interruption Insurance helps to keep business on track, until everything is fully recovered.

Business Interruption Insurance normally covers:

  • operational expenses (fixed costs, calculated based on previous periods);
  • unearned profit (income which would have been earned if the business was not interrupted by the disaster);
  • expenses for temporary location (the policy covers payments for renting a new location for the business);
  • extra expenses (listed in each policy specifically, based on the policy holder’s priorities).

Surety & Fidelity Bonds

Bonds

These bonds are offered by Insurance Companies and help protect a business in a case of occasional fails. That means if you, being a contractor who is building the certain construction for a third party, have failed to perform the quality work or you can not finish the work due to certain reasons – your customer gets compensation from the Insurance Company, so your business will not be impacted so much by that temporary failure.

This type of Insurance is very important for small and growing businesses who are not sure in own production capacity, so they prefer to protect themselves (and thus – their clients) by getting a Surety & Fidelity bonds.

Product Liability Insurance

Product Liability Insurance

This type of Insurance is vital for those companies which manufacture products, so the policy protects a business from claims related to the harm caused by the product’s failure (or the product’s low quality led to the third party’s damage).

The policy helps significantly, as a manufacturer cannot guarantee a perfect quality of every item produced. There are dozens of factors influencing the possible failure: human factor, occasional or temporary (and unnoticed) equipment failure, production control failure, etc.

Product Liability Insurance helps pay legal fees and lawsuit expenses related to the case. The only complication which may occur is to prove to the insurer that failure is not caused by your act of negligence or that was not an intentional harm caused by the employee (with an intention to harm a company’s reputation, for example). The policy also does not cover the harm which could have been foreseen and therefore escaped (could be determined after an official investigation conducted by the insurer).

Business Vehicle Insurance

Business Vehicle Insurance

It is hard to imagine any business without vehicles, and thus there is another significant peril for business owner – a car accident. Whether it was your employee’s fault or the fault of another driver, the consequences always lead to financial loss. To protect business’ vehicles the Business Vehicle Insurance is to your service.

The list of covered losses could be customized by the particular insurer in line with the client’s needs. The Insurance includes cars, trucks, vans and other typed of business vehicles. 

Professional Liability Insurance

Professional Liability Insurance

This type of insurance is crucial for companies providing services rather than manufacturing products. It is also known as PI (Professional Indemnity) Insurance and designed to protect your business from claims, resulted from the professional mistake (or wrong advice or unqualified services) made by one or several workers. Needless to say but all major companies in the USA are protected by PI insurance.

It is not a secret that legal consequences of such claims may turn into a real financial catastrophe, so the policy is a powerful protective shield. PI insurance is called an ultimate safety measure which works when everything else fails, so whatever the scale of a failure caused by your business to a third party, you’ll stay on track thanks to Professional Liability Insurance.

Public Liability Insurance

Public Liability Insurance

This Insurance is designed to protect a business from any forms of compensational claims from customers or public members who have suffered an injury or material loss resulted from the Company’s activity. This type of policy also provides financial protection in a case if one or several employees have occasionally damaged the health or a property of a third party (an individual or an entity not legally related to the Company).

Public liability Insurance covers almost all possible risks related to damage caused to a third person, from having your client injured in your office to damaging a client’s iPhone by spilling hot tea on it.

Commercial Business Property Insurance

Commercial Business Property Insurance

The title speaks for itself. Commercial Business Property Insurance is purposed to cover risks related to business property’s damage.

Some businesses connect operational processes with the property, so the intact property is vital for keeping business processes alive. If your business also depends on whether the property is undamaged, this type of policy will protect you from unforeseen business interruptions (in a case the property is damaged).

Worker’s Compensation Insurance

Worker’s Compensation Insurance

This type of Insurance is bought by employers who will have to pay compensation to workers in case of their injuries or illnesses which they’ve got in connection with work.

This type of policy states that a worker will receive certain compensation regardless of whose fault (worker’s or employer’s) led to the injury.

LEAVE A REPLY

Please enter your comment!
Please enter your name here