Business insurance is a protection against the risks that come with owning and operating a business. It can help cover costs associated with property damage, lawsuits, loss of income and employee injuries. Business insurance can be purchased individually or as part of a package called a business owners policy (BOP).
Every business has different risks and needs, so it’s important to evaluate your unique risks and determine what coverage is right for you. For more information, check out Insurance Agency Outsourcing Services.
Property Insurance
Whether it’s damage to your building or loss of revenue due to an insured disaster, property insurance helps safeguard your business against unexpected expenses. Also known as commercial insurance, it typically combines several coverages into one policy.
It can protect your owned or leased buildings and their contents, including fixtures and inventory, from damage caused by fire, weather events, theft and vandalism. It can also protect the physical assets your company uses on a daily basis, such as tools, machinery and office equipment. It may also cover losses from interruptions to your business or the loss of key employees (through life and disability insurance).
No matter the size of your business, it’s important to review your business’s needs periodically to ensure you have adequate coverage against damages, natural disasters and lawsuits. Contact a trusted business advisor to discuss your coverage options. A few common coverages include:
Liability Insurance
Few things are more risky than starting and running a business. Protecting your business from financial disaster can help preserve all your hard work and long hours. Business insurance provides protection for your company against common threats that could jeopardize your business operations, including property damage and liability claims.
Liability coverage safeguards your business against the financial consequences of bodily injury and property damage, medical expenses, libel and slander, settlement bonds and judgments. It also covers the cost of defending lawsuits.
Aside from covering your business against typical risks, there are other coverages you can buy to customize your policy and further safeguard your company’s assets. For example, you can purchase excess liability and commercial auto coverages to expand your standard business insurance policy. You can also get a business owner’s policy (BOP), which combines general liability, commercial property and business interruption insurance into one convenient package. Alternatively, you can buy individual coverages for specific threats, such as data breaches and cyberattacks.
Business Owner’s Policy (BOP)
A business owners policy (BOP) combines commercial property insurance and general liability insurance into one comprehensive package. It is designed with small businesses in mind and offers a safety net for your assets, physical premises and legal exposures while simplifying your business’s insurance needs.
The BOP generally covers damage to customer property from a fire or other catastrophe, but it can also include coverage for lost income due to interruption of your business. This is typically added via an endorsement (additional coverage).
The general liability portion of a BOP can help pay for things like medical expenses for customers who are injured on your business premises, as well as legal fees in the event that you are sued over harm caused by your business operations or products. The type of business you run, its revenue and previous claims history will all impact your insurance cost for a BOP. Some insurers offer additional add-on coverages, such as crime insurance or vehicle coverage.
Key Person Insurance
A key person insurance policy provides a financial lifeline to a business in the event of a crucial employee’s death or disability. This coverage is particularly important for small and medium sized businesses that depend on the expertise of a few individuals. The loss of one of these workers can be devastating to the company.
Peter owns a proprietary technology company and he relies on his top salesperson, James. If James died, the company would be unable to operate without him. That’s why he took out a key person insurance policy on James.
These policies typically pay a lump sum if the key person dies or becomes disabled. They may also include a rider for critical illness. This feature offers a lump sum if the key person is diagnosed with a critical illness like cancer, heart attack or stroke. These riders can be a cost-effective alternative to traditional whole or term life insurance policies. However, it’s important for companies to weigh the pros and cons of these types of policies before making a decision.