As a business owner, your company faces different risks every day. The purpose of insurance is to help protect your business from these risks.
You spend a lot of time and energy building your business. You’ve probably put a lot of money into it as well. What would happen if one of your employees accidentally destroyed company equipment or property? Or if you had to deal with an uninsured third-party liability claim? Or what about a fire or flood that destroyed your premises and all the inventory stored there? You won’t be able to predict when something bad will happen to your business, but you can take measures now to protect it from possibly catastrophic risks. Business insurance is one of the best ways to do that. Business insurance covers many general risks that most businesses face, specific risks related to your type of business, and even more specialized needs based on industry standards. Let’s take a look at some common types of business insurance and how they could help protect your business in various scenarios:
Commercial Property Insurance
Commercial property insurance covers any company property that may be destroyed during a covered loss. This could be machinery, computers, inventory, furniture, vehicles that your employees drive for work, etc. Your business property insurance policy will include two major coverages, named “building coverage” and “contents coverage”. Building coverage protects the structure of your business if it is damaged by storms, fires, or other covered events. It also covers your building against damage caused by vandalism. Building coverage is usually based on the replacement cost of the structure plus a percentage for repair costs. This means that if you have to rebuild your building, the insurance company will pay for the new structure based on the current cost of materials and labour. Contents coverage is for the items inside your building. It covers damage from the same causes as building coverage, but it also includes damage from theft.
Commercial Liability Insurance
Commercial liability insurance covers the costs of defending a lawsuit or paying any judgment that you lose as the result of a third-party claim. Contrary to popular belief, a commercial liability insurance policy does not protect you from a lawsuit that you win. It is meant to defend you in the case that you lose a lawsuit. Commercial liability insurance covers bodily injury, property damage, and legal costs related to those scenarios. These scenarios are not one-off events that happen rarely. In fact, they happen all the time, even to the most careful businesses. Liability can occur from an injury caused by a slip-and-fall in your store, damage to another person’s property from a delivery mistake, or job-related injuries that leave employees unable to work purely due to their injury.
Business Continuity and Disaster Recovery Insurance
Business continuity and disaster recovery insurance is similar to commercial property insurance in that it covers the damage to your company property, but it has different triggers. Business continuity insurance is triggered if there is a catastrophe in your area, like an earthquake or fire, that causes significant damage to your company. Disaster recovery insurance is triggered if a catastrophe causes significant damage to your company, as well as damage to your employees’ homes that forces them to stay away from work. Disaster recovery insurance might also cover the cost of relocating to a new location and paying employees while you are unable to operate at your normal location.
Employee Dishonesty Insurance
Employee dishonesty insurance covers the cost of your business if an employee commits fraud against the company. Dishonesty claims can be devastating to a company. Beyond the costs of defending against the fraud charge or paying restitution, there are also significant collateral costs to deal with. Employee dishonesty insurance can be purchased as a standalone insurance policy or added as an endorsement to your commercial general liability or commercial property insurance policy. While a policy for employee dishonesty coverage may sound excessive, consider the fact that only 3% of employees will not attempt to defraud their employer at some point in their career.
Business insurance is meant to cover the unforeseen circumstances that could sink your company. It is important to review your business insurance policies annually if you want to make sure you are protected. Before you select your business insurance policy, make sure you know the risks that are covered and the ones that are not. Also, make sure you know what the policy limits are on each coverage so you understand how far the policy will go to protect you. If you want to protect your business, make sure you have the right insurance coverage.