Business Type :

Every business, large or small, needs to protect itself from unfortunate or downright catastrophic losses. As it does for all things valuable—including your car, home, and even your life—insurance offers peace of mind and financial protection in times of trouble. Insuring your business is a smart move, as it can mean the difference between staying in business and going bankrupt.

The most common benefits of business insurance such as property loss, workers comp, and errors and omissions are well known, but you may be surprised by some of these loss coverages that a comprehensive policy affords you.

Legal Liability

Legal liability coverage typically comes in two forms, general and product liability, with general liability covering business-related injuries due to company negligence, whether on or off company premises. Product liability covers issues that arise due to inadequate services or defective merchandise.

Litigation is a time-consuming and expensive ordeal. Whether your company is found liable due to a court decision, contract violation, or legal statute, liability insurance is available to protect you. Basic liability insurance covers the costs associated with these liabilities, and a comprehensive general liability policy covers accidents and injuries involving a company employee.

While such policies generally cover medical expenses, attorney fees, and court fees, they do not cover product liability. For that, you need a separate policy.

Key Person Loss

No one likes to think about the possibility that a key employee may suddenly become disabled or die, but it is important to prepare for such an event so your business not only survives, but continues to operate smoothly. It’s true that life goes on regardless of loss, but the loss of a key person is not just a human tragedy—it can also result in significant financial loss for a company. Key person insurance helps mitigate any such losses.

E-Business Insurance

The Internet is a major business tool for most companies today. If your business’s Internet presence is disrupted by hackers or another breach, an e-business insurance policy protects you from revenue loss, theft of data, securities, software, and computer resources. It can also afford protection against loss of reputation, libel and public disclosure of private information. It can even cover the cost of consultants you’ll need to hire to both stop the attack and devise a plan for future attacks.

Data breach coverage assists in regulatory requirement compliance and is also available for defense and liability expenses in the event of a lawsuit due to a breach.

Business Interruption

One of the best benefits of business insurance on offer today may be business interruption protection. Most basic policies do not cover the indirect costs associated with losses, such as fire or flood. If your business suffers such a loss and has to close down completely, your general policy may cover repairs to the building and equipment, but it will not cover loss of income during the time it takes your business to recover or rebuild. You may be left with no income to cover normal expenses like salaries, benefits, and taxes, or even rent on a temporary location.

Quickly resuming business after a disaster is essential. Business interruption coverage will protect you from loss of revenue you would have made had the disaster not occurred, and covers operating expenses such as utilities and rent that may continue even as your income stream is disrupted.

Business Opportunity Plans

A Business Opportunity Plan (or BOP) acts as a starting point for many small businesses that require liability insurance. It allows your business to build a custom policy to cover specific areas in which you may suffer a loss. Primarily meant for “low risk” business, some common BOP coverages include:

  • Property insurance for your building, inventory, and equipment;
  • Equipment breakdown insurance, which covers things like power surges and operator error;
  • Rented vehicle coverage for autos that you lease, borrow, or hire;
  • Property damage and bodily injury liability if an employee, product, or service causes harm
  • Advertising injury coverage, which encompasses libel, slander, and copyright infringement

Finally, if you have a home-based business, your homeowner’s insurance is typically not sufficient to cover most business losses, so additional protection through a business policy is required.

The benefits of business insurance cannot be underestimated. The cost of insurance premiums is often offset by a tax deduction, so it’s just about always worth investing in a business insurance policy. To help you protect and maintain your company’s financial health in times of trouble, the SBA offers tips for buying business insurance.