Business Insurance Basics
In order to be able to protect your business from financial ruin you need to be aware of business insurance basics. It doesn’t matter whether you are a solo entrepreneur or a large company, these basic facts apply to all companies. A business is not a loan and its success is measured by the health of its finances. You can save money by doing some of these things. But remember, “Insurance IS the key to business success.”
To help you get a clearer picture of what is covered and what is not covered under different business insurance policies we offer a list of types of business insurance you may need. Remember, you are free to tailor your policy to meet your unique circumstances. Your specific coverage may vary depending on your location, industry or your specific business venture. Your business may require additional coverage that other companies don’t.
There are many types of insurance coverage to protect your business operations in the event of total loss or damage. Professional liability insurance protects you against professional errors and omissions. It means knowing your business operations and the possible risks that could threaten its survival. Many small businesses choose BOP or Business Owner’s policy or multiple BOP packages. This packages a number of common business insurances in one package, however, keep in mind that III states: BOPs don’t cover employer liability, automobile insurance, health and disability coverage, or professional liability.
If your business products include chemicals, pesticides, fertilizers or other similar items, then you need to have a separate type of business insurance policy to cover those kinds of losses. General liability policies to protect your personal assets. If you use public facilities or employees for your business operations, you will need a general liability policy to protect you against any claims.
Liability covers damages due to negligence. Every business owner should consider whether they have a duty of care to customers or clients. If you must take care of clients in a court of law, you’ll need liability insurance to protect your business assets. If a customer or client suffers damage or lose property because you were negligent, you can be held personally liable. It doesn’t matter if the damage was your fault or not; you can be sued for damages if you fail to take reasonable steps to protect them from harm. General liability insurance limits the amount of money that you can be sued for, so it’s important to set up an appropriate policy that limits your exposure to financial risk.
Product liability insurance protects you from claims based on defects in products. It is also commonly referred to as SPI and offers two distinct advantages over other forms of business insurance. First, it provides coverage for the manufacturing process through the warranty period, or “manufacturing defect.” This is very important because you don’t want to have liability insurance coverage in place when your product is produced and sold, only to find out that it has inherent defects upon receipt. Second, SPI also protects against claims based on advertising claims. If a customer or client develops a problem after purchasing your product, SPI will provide funds to help cover their expenses.
Pollution liability insurance basics are important too. If your business creates or uses an environmental product, such as a chemical or waste product, you may be held liable for any claims-made against you. Examples include runoff from a factory that makes paper, printing supplies, or other similar items. Additionally, if you use the land for agricultural purposes, SPI will protect you against claims-made against you for damage or death caused by your own operations on the land. In order to determine whether your business meets the definition of pollution, consult SPI’s guide on SPII: Pollution: Know the Facts (SPI Publication 715).
You’ll need property insurance if your business produces, owns, or uses any real estate. It covers any personal or public property you use. In addition, any assets you possess will also be protected. Business insurance basics, including this crucial coverage, are necessary for any business with employees. Without the right protections, even the best laid plans can fall through. Don’t take any chances.