Businesses need business insurance because it helps cover the costs associated with property damage and liability claims. Without business insurance, business owners may have to pay out-of-pocket for costly damages and legal claims against their company. Depending on the incident, this could be a financially devastating scenario business owners. In some states, businesses are required to have specific types of business insurance.
What are the Basic Insurance Needs for Most Businesses?
Most small businesses will need a business owner's policy (BOP). A BOP combines business property, business liability and business income insurance in one policy. Business property, sometimes called commercial property, helps, protect the physical location of your business and business assets. This includes tools, documents, equipment, furniture, and more.
Business liability, sometimes called "commercial general liability," helps cover the costs of liability claims made against your business. For example, if a customer were to trip and injure himself on your business property, he could bring a lawsuit against your company. Business liability insurance can help cover the costs of that claim.
Business income insurance helps replace lost income when your business can't operate due to a covered loss property loss. This is a great way to help ensure you can keep paying your bills, payroll, and ride out the temporary suspension of your business. For example, let's say a fire damages your business property and it's closed during repairs. Business income insurance can help replace the lost income while repairs are being made.
There are also several instances where certain states require business insurance coverage. In most states, businesses with employees need:
- Workers' Compensation Insurance
- Unemployment insurance
- Disability insurance
Workers' compensation provides financial support to employees who are unable to work because of a job-related injury or illness. For example, if an employee injures their back while lifting a heavy piece of equipment, workers' compensation insurance can help cover their medical costs.
Unemployment insurance provides benefits to workers who displaced from their jobs through no fault of their own.
Is Business Insurance Required?
As a business owner, you may be asking yourself, "Is business insurance required?" The short answer is no. There are many types of business insurance options, They are available to business owners in the event of a catastrophic natural disaster or when faced with a claim or lawsuit against the business or other employees.
In almost every state a certain amount of insurance must be held for employees operating under your business, such as worker's compensation insurance. Covered risks under a business insurance policy include theft, injured workers' lost wages, and more. If your business does not have a business insurance policy, the costs may come out of pocket. In some cases, this can completely ruin your business if you do not have the finances.
So, is business insurance required in your state? If you have employees, most states require you to have workers compensation and unemployment insurance. Depending on where your business is, you may need disability insurance. Business insurance is a tool for business owners to cover themselves and their assets in case of an unforeseen event.
Specific Insurance Needs for Your Business
There is a wide variety of business insurance coverages available to business owners, so they can tailor their insurance protection to address the specific risk facing their business. When choosing coverages for your business, think about the important aspects of your operation that need protection. These could include:
- The type of work you do
- Your physical premises
- Property and equipment
- Intellectual property
- Employees and customers
Keep in mind that as your business grows, your coverage needs may change.
Also consider that businesses in different industries need specific business insurance coverages to help meet their unique needs.
Insurance Needs for Auto Service and Repair Shops
Auto Repair Shops need Garage Liability cover damages that occur during the operation of an auto in the course of garage operations.
Auto Service Shops also need Garage Keepers coverage to provide coverage for physical damage to a customer's auto while in the care, custody or control of the auto shop.
Insurance Needs for Landscaping and Arborists
Landscapers should look into buying Business Income Extension for Off-Premises Operations. This coverage can help replace income lost if your business can't operate because equipment was damaged at the job site. Landscapers might also consider adding Herbicide/Pesticide Insurance coverage. This can help cover costs resulting from pollution caused by using pesticide or herbicide.
Insurance Needs for Craft Breweries
Craft Breweries face various exposures such as needing Equipment Breakdown Coverage for tank implosion or power surges that cause an electrical breakdown of their custom-made glycol chiller system.
Spoilage is another important coverage that breweries need. If the glycol chiller breaks down this can result in spoilage damage to their stored beer product due to the loss of cooling.
Insurance Needs for Retail Businesses
Retail businesses can benefit from adding Business Income form Dependent Properties and Franchise Upgrade coverage. Business Income from Dependent Properties helps cover lost business if a third party your business depends on causes your store to loss business. For example, you may lose business if a manufacturer of goods you sell unexpectedly shuts down and is unable to deliver the items you ordered. Depending on the reason for shutdown, this type of Business Income Dependent Properties coverage can help cover the income you lost as a result.
Franchise Upgrade coverage can help pay the costs to upgrade a retail store to meet franchise standards after a covered accident.
Insurance Needs for Restaurants
Restaurants and other food service businesses can help protect themselves by adding Liquor Liability and Temperature Change insurance. Restaurants that serve liquor are at an increased risk. If a patron who was served alcohol causes a fight or accident, the restaurant could be held liable. Liquor Liability helps cover the cover the costs of a claim involving the sale of liquor at a restaurant. Temperature Change coverage helps protect restaurants if refrigerator units break down and cause spoilage. If this happens, Temperature Change coverage, can help pay for cost to replace the stock.
Business insurance helps protect the business you worked so hard to build, contact the professionals at G & H Financial Insurance at 281-395-5497 or submit a request to have an agent contact you.