Choosing the Right Insurance Coverage for Your Business

As a business owner, you need to protect yourself from the consequences of financial loss. This won’t always be possible, but you can sometimes do it with the right insurance coverage.

Due to the nature of insurance, you can’t just pay for the cover-all policy. It doesn’t work that way. You need the right insurance coverage for specific fields and occasions. In other words, you need more different types of insurance coverage

What kind of coverage does your business need? What are some types worth considering? Does the industry affect the type of insurance you should get?

Try to find the answers to some of these questions!

  • 1. General liability insurance

When talking about insurance, chances are that you’re referring to general liability insurance. This is a policy meant to protect you from bodily injury and property damage claims. In other words, insurance covers a small business’s most common grievance.

Generally speaking, there are three major types of general liability insurance policies:

  • – Third-party bodily injuries
  • – Third-party property damage
  • – Personal and advertising injury

The most important thing to remember about these three is that they are primarily concerned with external damage. In other words, it’s about the damage your business and employees cause to external people and factors. 

Most importantly, most general liability insurance policies also provide product liability insurance. So, if a product you’ve sold or manufactured causes harm, this insurance should help cover it. 

If you are operating on a tight budget and must choose one insurance policy, you should go for this. 

There are some scenarios in which this policy will not be enough. For instance, if you rent a space or own a building, you may have to get another type of coverage. The same goes for holding costly equipment or fearing a disaster that would cause too much downtime.

  • 2. Commercial property insurance

Commercial property insurance is essential for rebuilding your business after an accident. Still, it must cover the exact type of damage that your property sustained. 

The very basics it should cover are fires, floods, and storms. Falling trees and burst pipes are also a must.

Then, depending on the area and political climate that you’re currently in, you also want to be protected from theft and riots. This is a huge issue that many modern business guides are not addressing enough.

Buildings insurance vs. contents insurance

There are two types of insurance to cover the physical structure of the property and the insides of the property. 

So, the walls, roof, floors, pillars, etc., are covered by buildings insurance, while the contents insurance covers the furniture, equipment, and appliances.

Still, it’s not always a clean cut. For instance, buildings insurance covers hardwood floors and laminate; content insurance covers rugs. While it makes sense, when you read it, it could have also gone the other way around. 

It’s difficult to keep track of it all, but the point is that you need them both. The majority of insurance issuers recognize this and offer both as a package. Still, it’s always best to do your research and see what you’re getting.  

  • 3. Commercial vehicle insurance

Vehicles owned by the company should have commercial auto insurance. This way, vehicles, as precious assets, are protected from damage.

In terms of coverage, there are two types of liability coverage and two types of physical damage coverage that you need to worry about. 

First, commercial vehicle insurance should cover collision and comprehensive losses. In other words, the insurance covers the damage if your company car is in a car accident. However, the insurance should also cover damage from the weather. Protection from theft is one of the main reasons why companies get vehicle insurance for their fleet.

You must get commercial vehicle insurance if you’re using corporate vehicles for work-related tasks. Otherwise, you’re exposing yourself to unnecessary risk. 

Sometimes, however, simple vehicle insurance won’t be enough. You may have to look for a special policy if you transport equipment, hazardous materials, or tow vehicles. For instance… 

Refrigerated trucks insurance

When transporting refrigerated cargo, you need insurance covering both the truck and the cargo. If you take some time to learn more about refrigerated trucks insurance, you’ll learn that for this system to work, the cargo unit needs to be in great shape. 

A problem with the cargo unit can cause massive liability exposure. In this scenario, you’re also likely to suffer from a reputation hit. Still, you’ll make a tremendous difference by getting refrigerated truck insurance; you’ll at least be able to cover the financial liability.

  • 4. Workers’ compensation insurance

Previously, we’ve mentioned that general liability insurance covers the damage or injury caused by employees to third parties. What about injuries that your employees suffer in the line of work?

In the eyes of the law (and by following a logical thread), your employee would never be in that situation if not for you. Sure, this didn’t cause an injury, but one can argue that you share a part of the responsibility. This is especially true if the injury is such that it will prevent them from earning in the foreseeable future. 

Most importantly, by accepting worker’s compensation, the employee waives their right to sue the employer for damages. Still, this compensation needs to be hefty, and it’s the least painful if insurance covers it. 

There are two main reasons why workers’ compensation exists. First, it must replace the salary and provide an injured party enough funds to make ends meet while they can’t work. Second, it’s there to help reimburse healthcare costs, which can be sizable.

Special considerations and exceptions

Not everything is simple. For instance, just because an employee got injured in the line of duty doesn’t mean they’re always due compensation. The employer can dispute the claim if they prove they’re not liable.

There are a lot of malicious parties, including some physicians, that help malicious employees fake these claims. Under some extreme circumstances, the courts treat this as an organized criminal conspiracy. So, even if you have insurance, do your investigative work.

Lastly, independent contractors are usually not eligible for workers’ compensation. This, however, depends on the state and the contract they’ve signed. In the past, this wasn’t as big of an issue, but with the gig economy on the rise; it’s worth keeping an eye out for. 

  • 5. Product liability insurance

While general insurance should partially cover this, product liability insurance does better.

First, it covers claims regarding the use of products your company deals with (regardless of whether you’re selling, distributing, or manufacturing them). 

The most important thing you should understand is that you’re only covered in a scenario where your product causes bodily harm. If people get injured due to defects or bad designs, this type of insurance will have you covered. 

At the same time, if the product doesn’t work or doesn’t work as promised, this is something else entirely. We must clear this out in time since many people start choosing product liability insurance believing that this is precisely what it does.

It sounds intuitive, although, upon further consideration, you have to realize that it doesn’t make too much sense. After all, why would anyone spend too much money testing or developing their products when liability insurance could cover it? 

Also, looking for product liability insurance is just about being safe. It doesn’t necessarily mean you’re concerned with your product or have doubts.

  • 6. Cyber liability insurance

In this day and age, entering a business without cyber liability insurance is too risky. Data breaches and various cyber security issues are a certainty in this field. 

While you know where the threat comes from, you must also understand what cyber liability insurance covers. In most cases, a decent plan will cover the following:

  • – Litigation expenses
  • – Regulatory fines
  • – Business interruption
  • – Forensic investigation
  • – Betterment

To make the long story short, when a data breach occurs, 

The thing is that this coverage doesn’t exist as long as some of the previously-mentioned types. This is why an apparent lack of guides on the subject matter exists.

You must also understand that cyber liability insurance may cover lost devices. Why is this so important? First of all, gadgets leave offices all the time. With many companies implementing hybrid business models and BYOD systems, tracking it all is nearly impossible. This is one more reason for you to choose the right insurance coverage. 

Picking the right insurance coverage is the only way to protect your enterprise

Mistakes, accidents, and disasters happen when you least expect them to. This is why it’s so important that you have the right insurance package.

While you can cover many things with general liability insurance, this is rarely enough. Instead, you need the right coverage for every key area to stay safe. You don’t have to overkill it, but you can never be too safe. 

By Srdjan Gombar

Veteran content writer, published author, and amateur boxer. Srdjan is a Bachelor of Arts in English Language & Literature and is passionate about technology, pop culture, and self-improvement. His free time he spends reading, watching movies, and playing Super Mario Bros. with his son.