Insurance facilitates banking, and in many cases, you simply cannot get the finances you need to start and run your business without the right types of business insurance or coverage.
Consider the following scenario: A restaurant owner likely depends on customer revenues to keep his or her business afloat. What will happen if a restaurant suddenly burns down? In this situation, the restaurant owner will need to find a way to pay employees’ salaries, business mortgage expenses and other business costs until his or her business is restored.
Fortunately, there’s business insurance for this exact scenario: business income insurance.
With business income insurance, a restaurant owner can reap the benefits of added coverage on his or her property insurance that protects against disaster-related closure of the business or the rebuilding process after a disaster.
Business income insurance represents an important type of insurance that many individuals might not even consider when they first look for financing for a restaurant or any other type of business. However, due to the risk-averse banking sector, soon-to-be restaurant operators and other business owners may need to purchase this coverage before they can receive financing.
Insurance can be tricky, and as a business owner, you probably have two primary concerns when it comes to insurance: you don’t want to lose money, and you don’t want to be sued.
Thankfully, business insurance can protect your company against a wide range of risks if you select the right coverage.
Although your company might have already purchased property insurance, it is important to note that this coverage will not safeguard your business against all risks.
Not all business insurance is created equal, and what suits one business might not work for another. Comparatively, different types of business insurance are available to meet the needs of all manner of companies, ensuring each distinct business is protected against a variety of dangers.
5 common types of business coverage
- General liability
In the event of a workplace accident or injury, you’ll want to ensure your business is protected. With general liability coverage, you’ll be covered against payments due to bodily injury, property damage and more.
Conversely, general liability insurance does not cover employee injuries, auto accidents and professional mistakes (e.g. a tax accountant makes a mistake on a client’s tax return). This means that you’ll need to add coverage for various situations that your business encounters every day; otherwise, your company could face additional risks.
- Workers’ compensation
Your business may commit significant time and resources to protect its workers, but there’s no telling when an accident or injury at work might occur. With workers’ compensation coverage, you’ll be able to protect your business if an employee is unable to work due to an on-the-job accident, illness or injury.
Workers’ compensation insurance is a requirement in every state except Texas. It covers an employee’s lost wages and medical treatment expenses if a worker becomes ill or gets injured at work.
- Fiduciary liability
Does your business offer its employees a 401(k) or another type of pension or retirement plan? If so, you will want to pick up fiduciary liability insurance to ensure you’re covered against alleged errors or omissions or breach of your business’ fiduciary duties.
Fiduciary liability insurance safeguards your company in the event that plan participants claim there are administration errors. Without it, you may be forced to cover lawsuit defense, judgment and settlement expenses on your own.
Pollution coverage originally was included in most business insurance policies. Today, you may need to add this coverage if your business deals regularly with carbon monoxide, lead, sulfur dioxide and other harmful pollutants.
With pollution insurance, you’ll be better equipped to control the costs associated with pollution cleanup. Plus, pollution coverage often serves as a valuable option for garages, junkyards and industrial manufacturers, along with hair salons and dry cleaners that use hazardous chemicals on a day-to-day basis.
- Professional liability
To better understand professional liability insurance, let’s consider the following scenario:
A bride-to-be arrives at a hair salon a few hours before her wedding. A hair stylist makes a mistake along the way that causes the client’s hair to turn orange—something that could ruin the bride’s special day.
No business owner is perfect, and unfortunately, errors and mistakes sometimes happen that can affect a client. With professional liability coverage, your business will be protected against issues that could arise as you offer your everyday products and services to customers.
As a business owner, your goal is to never have to use your insurance. If you do, it likely means there has been a major problem that affects your company, its employees and/or its clients.
On the other hand, meeting with an insurance agent and discussing your business insurance options will guarantee you’re able to get the coverage you need to consistently safeguard your company against risk.
An insurance agent will ask the right questions and help you understand all of the coverage options at your disposal. In addition, they can offer business coverage tips that may help you secure the financing you need to make your business dreams come true.