Protecting Your Business and Your People with the Right Insurance

Managing risk is an intrinsic part of running a business. While different companies in different sectors are exposed to different kinds of risks, there are some risk management tools that are common to all. Insurance is a case in point. About three in four American businesses face one or more insurable events every year.

Without the appropriate cover from a reputable insurer, a business has no protection in the face of a claim, and if the claim is large or the company is small, that could be enough to bring a business to its knees. Some types of business insurance are mandatory by law to ensure the protection of employees and third parties. Others might be a wise precaution from a risk management perspective, while still others could be deemed unnecessary depending on the business and its activities.

Arguably the most important policy of them all, General Liability kicks in when your business faces a claim relating to injury or property damage to a third party. It covers everything from medical expenses if someone slips over on a wet floor right through to a wrongful death lawsuit. It also covers accidents and injuries for work performed at a customer’s location, for example, a builder’s ladder falling and damaging a customer’s property.

Workers’ compensation insurance is the second vital policy. It is a legal requirement for any business that has employees in most states. It provides benefits to employees who suffer work-related illness or injury. Again, this can range from a few hundred dollars to hundreds of thousands or even millions in the worst case.

The third type of insurance that there is no avoiding is commercial auto insurance. This covers vehicle damage and bodily injury claims arising from a road traffic accident when an employee is driving a company-owned vehicle for business purposes. We are all accustomed to vehicle insurance, so this seems simple. However, take care if employees drive their own vehicles for business purposes, for example, to attend a client meeting or run some errand.  In the event of an accident, their personal car insurer could deny coverage, so it is important that the commercial policy covers non-owned vehicles.

Nobody is perfect. If your business relies on humans carrying out professional services for customers, there is always the chance of them making mistakes. Professional indemnity, also called professional liability, insurance covers claims arising from such mistakes. This could include errors on a production line leading to defective products and the cost of a recall or mistakes made by an accountant that expose a business to a regulatory fine. Note that this type of insurance typically excludes gross negligence or wilful misconduct.

This is similar to the contents insurance you probably have at home. It helps to cover the cost of repairing or replacing property, plant equipment, and so on in the event of theft or damage. Like home contents insurance, there is no obligation to have it, but if you have valuable property or stock, a commercial property insurance policy makes a lot of sense.

The above covers the most common policies, but the list is not exhaustive. Other types of business insurance you might consider include data breach insurance, employment practices liability, and business interruption insurance.