Running an enterprise with employees at a physical location creates various risks that must be addressed with some form of business insurance. Failing to get the right coverage can lead to bigger problems and costs when an accident occurs. The exact type of insurance policy you need comes down to evaluating the specific risks associated with your business.
Here’s a look at the different types of business policies that you need to consider.
Exploring Coverage Possibilities
- Commercial General Liability Insurance – Most small businesses use this type of coverage if the risks are minimal in order to cover damage the company causes to others. This business insurance policy covers liabilities that might occur at your workplace or in the field with a customer. Accidental property damage up to a specified limit is paid for by this policy. Additionally, CGL covers bodily injury, copyright infringement, legal expenses and liabilities involving product defects. While this commercial coverage is the most common in the business world, it may not cover all the risks involved within a certain industry.
- Commercial Property Insurance – While CGL covers damage a business causes to others, this insurance covers damage to your property caused by nature and other humans. It usually covers various levels of storms, tornados, and hurricanes, but it doesn’t necessarily cover all disasters. It replaces/repairs property damage due to fires, for example, but not those caused by neglect. Unpredictable risks such as vandalism and theft are covered by commercial property insurance. Owners with this coverage can supplement it with business interruption insurance, which helps pay operational costs while the company undergoes repair work.
- Commercial Auto Insurance – Much more detailed than personal auto insurance, commercial auto coverage can be broken down into auto liability, uninsured motorists and physical damage. Auto liability covers accidents and bodily injuries caused by your drivers, but you have to set appropriate limits for your company, such as over $1 million. Uninsured motorist coverage pays for damage caused by a driver who lacks insurance, as there are over 30 million uninsured drivers in the United States. Physical damage coverage pays for theft and vandalism even if the car doors were unlocked.
- Workers’ Compensation Insurance – This worker protection policy is required in most states for companies that employ at least one person. It protects the company from employees suing their employers over accidents that occur at the workplace. Factories that involve machines and production often have built-in risks, as do those that involve travel. However, workers can get injured in any setting, such as slipping and falling on the floor, which can lead to broken bones and other injuries. Workers’ compensation pays for medical bills and lost wages for workers who are injured on the job. If an employee dies due to work-related injuries, the coverage may compensate the victim’s family. Workers’ comp may also pay for minor injuries such as back pain from sitting at a computer all day.
- Commercial Excess Liability – This coverage is used to raise the existing coverage limits and provide extra protection. It doesn’t just apply to high-risk companies such as construction firms. The policy provides additional coverage in case the court decides to award larger-than-expected settlements, which can occur with social inflation cases. Social inflation involves raised judgements for victims of corporate negligence, such as when a chemical company faces a class-action lawsuit for dumping a cancer-causing chemical close to a thriving neighborhood. Large corporations that use dangerous substances in the production process must be concerned about the rising number of social causes that win court and community sympathy over life-threatening accidents.
Deciding on the Right Business Insurance
Every business is unique, so you must determine your own insurance needs based on the risks posed by your operation. Coverage that works for a trucking company with a large fleet most likely doesn’t apply to a tax consultant who works at home. First, you need to evaluate your risks and then talk with an experienced insurance agent who can help you navigate through your options. Usually, the size and location of the facility, type of machinery, and number of employees have an enormous impact on the type of insurance a business needs.
One of the most important aspects of commercial insurance is coverage limits. If your coverage limit is $1 million, your company will be responsible for paying any amount above that level. If you conclude that it’s possible to be sued for higher amounts, you should raise the limit. Predicting accidents is impossible, but it’s smart to be on the safe side, so it’s best to plan for worst-case scenarios.
Theft and vandalism are also difficult to predict, but you can still assess your company’s level of safety. If you don’t invest in bright lighting, alarms, and video surveillance cameras, for example, it increases the risks of theft and vandalism. In this situation, you should consider raising policy limits, especially if your facility houses expensive equipment. Discussing other risk scenarios with your insurance agent will help you arrive at the proper choice for coverage.
Getting the right business insurance is crucial to launching a start-up. It’s better to have enough coverage to pay for unexpected setbacks than to pay for all company disasters out of your own pocket. If you need assistance in selecting the right coverage, contact the experts at The Reardon Agency today. We are here to help you with all your coverage requirements.
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