Business insurance is an essential part of any company's operations, as it helps protect the business from financial losses due to unforeseen events. There are five main types of business insurance that companies should consider in addition to workers' compensation insurance: general liability insurance, professional liability insurance, commercial property insurance, business income insurance, and cyber liability insurance.
General liability insurance
is a core component of business insurance that safeguards companies from lawsuits filed by people outside the company alleging that the company caused bodily injury, property damage, or damage to reputation. This type of coverage is suitable for businesses that sell physical products, as it covers legal costs if someone claims that a product caused an injury, damage, or loss.Professional liability insurance is also important for companies that provide any type of professional service, as it protects them against claims of negligence, misrepresentation, poor advice (even if they think it's good advice), or losses due to the services they provide.
Commercial property insurance
is necessary for businesses that own or rent a property, as it covers damage or loss of physical property due to things like fire or theft.Business income insurance
, also known as business interruption insurance, helps cover lost business income, rent, payroll and taxes in the event of a covered disaster or a situation that prevents the business from operating.Cyber liability insurance
is designed to protect businesses and their customers in the event that digital data is compromised.Supplemental business insurance takes effect after a company has exhausted the limit of their liability coverage for a particular incident. This type of coverage is ideal for owners of small and medium-sized businesses, such as restaurants, retail stores and wholesalers. Alex Roje, partner at Lathrop GPM, recommends that every small business owner evaluate their specific needs and responsibilities to develop the combination of business insurance plans that best protects their business. In addition to these five main types of business insurance, companies may need other types of coverage depending on what their business does, where it operates, what types of assets it has, and other factors. Most businesses need general liability insurance and may qualify for discounts if they buy multiple policies from the same insurer.
Businesses should also be aware that their state's laws may require workers' compensation insurance and commercial auto insurance.
