5 Types of Business Insurance and Why You Need Them

After months of brainstorming and planning, you’ve finally decided to make your business idea a reality.

However, one thing you should know before jumping in headfirst is how to mitigate the risks of starting a new business. Ignoring the threats may become problematic as they can damage your business beyond repair even before getting a chance to reinvest your earnings. This is why you must ensure your business before taking the next step.

Essentially, business insurance is a type of insurance that protects big and small businesses against any losses from incidents that may occur in their operations. It’s viewed as a form of risk management that benefits your company. For instance, buying business insurance can help mitigate the uncertainty of financial losses, increase business efficiency, and ensure business continuation. It can also guarantee your employees’ welfare if injuries and sickness occur.

Hence, when thinking of the best insurance policy to buy, there are many factors for you to consider, so you need to first understand the insurance requirements of your business before making any concrete decisions.

Essential Business Insurance

So what are some business insurance policies you should look into purchasing? Let’s look at the top five types of business insurance you can buy and why they are essential to a successfully run business.

1. General liability insurance

Think of all the threats to your business and imagine the cost of meeting all the expenses that might be caused by these risks. The price will surely be too high and can lead to the collapse of the business.

This is why general liability insurance is vital – because it will cover the most common risks that any new business might befall. This insurance covers claims from threats such as accidents, injuries, or negligence.

While you should expect to be sued by anyone, business competition can bring the claws out! You can also be sued by employees, clients, suppliers, and many other people you work with and who work for you. You need to be cushioned from the legal expenses that might arise, and the best insurance for this is general liability insurance.

2. Life insurance

Have you ever wondered why some companies attract high-quality employees? Providing them with life insurance is among the factors. The staff needs to be motivated for your company to perform well and generate more revenue. You can have a plan where you provide life insurance over 40 policy to those individuals who fall in that age bracket, especially the executives.

Without professional employees, your business has little chance of surviving in any competitive era. You can even identify key players in your business and provide them with critical person insurance to cushion them against any emergency that might come their way. What you achieve by this is a more focused and motivated workforce that knows they are being well taken care of.

3. Property insurance

Think of all the resources you have put into your business: money, time, brains, and equipment. Imagine all of it coming to an end instantly, to the point where you are left with nothing! To avoid such a scenario, take up property insurance to help secure those things you’ve spent the most on. With this type of insurance, you can rest easy knowing that even if something sudden happens, like a fire, you’ll be able to get part or all of the insured items.

On the other hand, if you’re looking for specific property insurance that covers possessions that are damaged due to fire, flood, and other disasters, then business contents insurance may be an ideal option. Whether it involves a computer, a laptop, office furniture, and other equipment vital to your business operations, you can file a claim under this insurance policy if they get damaged. The proceeds will shoulder the replacement costs for the affected personal properties.

Insurance consultants will always advise you to get “all-risk” insurance which covers everything in your business. However, note that this insurance premium is a little more expensive.

4. Workers’ compensation insurance

This type of insurance is mandatory in most states and provides coverage for medical expenses and part of the lost wages for injured employees. Workers’ compensation insurance is responsible for the compensation of employees who get ill or injuries while on duty.

This insurance is necessary as it allows the employees’ lives to stabilize after an accident or sickness. This policy will ensure your employees are more productive as the business owner.

5. Business interruption insurance

When events beyond your control negatively impact your business, they disrupt everything and everyone, from your staff to your customers.

To be on the safe side, you need an insurance policy that will cover you from the effects of the interruption. The best approach for this is the business interruption plan, which cushions you from the losses made during such a time.

Summing Up

It’s risky to operate a business without insurance policies covering the basics.  Make sure your business has these five essential business insurances.