Obtaining insurance is an important part of any solid business plan. Much like home or auto insurance, business insurance protects your investment and the assets of your company from unexpected hazards and risks, such as fire, floods, or theft. Insurance can also protect your business from unanticipated liability claims or workers’ injuries. While some forms of business insurance are not required, having good insurance is generally a smart business move.
Property insurance for businesses is much like insurance for other assets that you may own. It protects business owners from having to bear the financial burden of replacing equipment or assets should unexpected challenges arise. Property insurance for businesses can vary widely, but it should include coverage for any equipment or machinery the business owns, specialized furniture, office computers and accessories, supplies and day-to-day necessities, and any particular features of the property that are of importance to the business.
Property insurance for businesses has varying degrees of protection, depending on what the business owner is willing to pay. Basic policies typically reimburse owners for expenses incurred as a result of extreme circumstances, such as fire or natural disaster damage. Importantly, unlike with home policies, theft is typically not included in basic property insurance for businesses. Instead, owners will need to purchase what is often known as special form coverage, which covers all types of risk, in order to get coverage for theft.
Liability insurance is a form of insurance that protects businesses from claims made by third parties. For instance, if someone trips and falls while in your place of business and injures themselves, they may decide to sue you for the harm they experienced. Liability insurance pays for you to defend against such a lawsuit, and in the event damages are owed, it will pay for those damages to a third party.
Depending on the type of business you run, certain forms of liability insurance may be important. For instance, professionals in a partnership, such as doctors and lawyers, typically acquire malpractice insurance, which protects professionals from claims that their actions fell below a standard of care and caused injury to another. Similarly, businesses with boards of directors and officers may wish to purchase directors’ and officers’ liability insurance, which protects such individuals from claims against the business and their actions as representatives of the business.
Workers’ Compensation Insurance
While liability and property insurance are optional forms of insurance for a business to buy, most states require all businesses with employees to carry workers’ compensation. This type of insurance protects business owners when their employees are injured while on the job. It typically provides for the medical care that employees may need, as well as compensation for last wages. In exchange, many workers’ compensation laws prevent workers from bringing negligence claims or private lawsuits against their employer, unless the circumstances are particularly egregious. In some states, employers may opt to obtain workers’ compensation through publicly provided plans or an insurance pool that the state government administers. In others, workers’ compensation is provided through qualified private insurance providers that are selected and approved by the state.