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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 for business owners. In some states, businesses are required to have specific types of business insurance.
Business Owners Policy
Most small businesses will need a Business Owners 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, and furniture.
Business Liability
Business Liability, sometimes called “commercial 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
Business income Insurance helps replace lost income when your business can’t operate due to a covered 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 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:
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Workers’ compensation insurance
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Unemployment insurance
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Disability insurance
Workers' Compansation
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 are displaced from their jobs through no fault of their own.