Running a business is a risky sport. Right from day one, the enterprise faces various risks, some of which can ultimately cause its failure.
This is why having a risk management strategy is one of the keys to running a resilient, successful business. In your risk management toolbox, business insurance is the biggest asset. It protects you from financial losses if a risk event comes to pass.
There are different types of business insurance policies that you need to purchase for your organization to have adequate coverage. Dive in to learn about the common insurance plans for business.
So, What Is An Insurance Policy?
Insurance policies are contractual agreements made between the one opting for the insurance and the insurer. Such contracts detail information such as:
- What is being insured?
- The cost of insurance.
- The conditions under which claims are made.
- The payment terms are in case the claims are honored.
On top of that, most insurances come with deductibles, that is, the amount anyone opting for the insurance has to pay towards a particular claim before the insurer starts paying. Typically, the higher the original deductible amount, the lower the cost of the insurance or the premium.
Moreover, premiums are typically paid monthly, quarterly, or annually. In fact, the policies additionally state the different coverage terms and conditions, including when the insurance will be up for renewal.
Key Highlights:
- Owners of small businesses have adequate, broad insurance. They review and update their coverages periodically as circumstances change.
- Policies meant for small businesses usually include product liability, commercial insurance, professional malpractice, and business owner’s policy.
- Minimal requirements for business insurance are typically state-imposed with the location depending on the state where the business is located.
3 Different Types of Business Insurance Policies You Should Know About
So, what are the three different types of business insurance policies that you must know about? Scroll down to find out more about these polices.
1. General Liability Insurance
Your business (yourself included if you’re a sole proprietor) faces various liability risks. If you run a brick-and-mortar store, for example, a customer could slip and get injured while on the premises. The business could be held liable for causing the injury, and you’ll have to compensate the customer for their injuries.
General liability insurance shields you from the financial costs of such claims. The insurance provider will compensate the claimants, effectively ensuring you don’t dig into your own pockets. This insurance policy can also cover third-party property damage and attorney fees.
Some providers can also tailor it to suit the specific needs of your business. If you run in the lumber industry, you face some unique risks. View sawmill insurance here to get a quote.
2. Business Interruption Insurance
The COVID-19 pandemic is a stark reminder of the importance of business interruption insurance. If for some reason, your business cannot engage in its normal operations, you stand to lose revenues, at least until normalcy resumes.
Not many businesses can survive an interruption that lasts for several weeks, let alone a whole year. Without any revenues coming in, they won’t have any funds to keep the business alive.
Business interruption insurance steps in when a business loses income because of certain interruptions. You’ll receive income compensation as per the terms of your coverage. With these funds, you can, for instance, keep paying your employees instead of letting them go.
3. Cybersecurity Insurance
There are about 2,200 cyberattacks per day, and most of these are targeting small businesses like yours. If you have not been attacked, it’s not a matter of if, but when.
A cyberattack can cripple your website and lead to data loss. Either outcome will have big operational and financial implications for your business. Cybersecurity insurance is designed to protect businesses from losses arising from these attacks.
Your business doesn’t have to be operating at the forefront of technology for it to need cybersecurity insurance. Even having just a social media page for your business is enough to warrant coverage.
So, What Does All Business Insurances Cover?
Business insurances offer comprehensive and staunch protection against unforeseen events and probable risks that any business can encounter. In fact, organizations that opt for curated portfolios cover such risks and unforeseen events.
As a result, here’s an overview of what most business insurances cover.
1. Group Mediclaim:
Group Mediclaims or Group Health Insurance Plans is a scheme that ensures all employees as well as their immediate families against sudden medical expenditures. This typically includes hospitalization charges, with the actual duration being 24 hours at the very least. Also, it covers a pre-hospitalization period of 30 days and a post-hospitalization period of 60 days.
2. Group Personal Accident:
This is a type of Mediclaim Policy that falls under the concept of Business Insurance. Here, the expenditures for any unforeseen event, such as accidents, are mostly covered. Also, the policy offers compensation to immediate family members in case of accidental death.
3. Asset Insurance:
The plan for asset insurance insures a company’s assets. Generally, this includes service facilities, damage to buildings, and problems with gates and walls. Moreover, asset insurance plans always cover repair expenses as well.
4. Marine Insurance:
The marine insurance plan covers all expenses incurred due to a basic loss or damage of any good during transit. Generally, this plan covers transit damage and loss caused via channels such as posts, railways, airways, roadways, sea, or couriers.
5. Liability Insurance:
This liability insurance plan ensures a third party engages with a company. This kind of legal liability is typically seen in warehousing, construction, and manufacturing industries. Generally, this includes damage or property loss, injuries or diseases, accidental deaths, and more.
Buy the Right Business Insurance Policies
Paying an insurance premium might not be one of your favorite activities, so getting multiple business insurance policies might feel like a pain. Unfortunately, you really don’t have a chance. Without adequate insurance coverage, you’ll be living on the edge, wondering when a risk event will occur and leave you with a huge bill.
In 2024, ensure you have these policies, and don’t forget to bookmark our blog and come back for more articles.
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