Business Insurance – make sure you are covered

Business insurance covers any type of insurance taken out by a business to protect against operational losses. The type of loss that an insurance policy might cover depends on the insurance company, the wording of the policy and any local legal or financial limitation. It may also depend on the industry of the type of business for which the insuree wants coverage.

There are several broad types of business insurance. General Liability insurance protects a business against a variety of claims, which might include personal or bodily injury, damage to property, negligence, or a broad variety of other operational mishaps and accidents. Product liability insurance protects against consumer claims in the event that they suffer injury, illness or even death as a result of using products made or supplied by a business which turn out to be faulty or defective in some way. Key Person insurance – also known as Keyman Insurance – is a form of life insurance, and covers a business for financial losses that occur due to the death or incapacity for any length of time of an important member of the business. The CEO, for example, or a key research scientist.

Beyond these general categories, there are other types of specific insurance available which a business might consider taking out to insure itself against risk. There is commercial auto insurance, for example, that protects vehicles which carry a company’s personnel, products or equipment, and even employees who drive their own cars on company business. Professional Liability Insurance – also known as Errors and Omissions Insurance – protects a business which either fails to provide a proper professional service, or whose clients suffer loss as a result of professional advice that turns out to be wrong. This type of protection is not covered by general liability insurance policies so this is something that definitely needs to be considered if you are an accounting firm, lawyer, consultant, real estate agent or even hair salon.

Directors and Officers Insurance protects the directors and senior officers of a company against any actions they take which affect the operations or profitability of a business. Should the director of a company find themselves facing a lawsuit, for example, this type of insurance would protect the business against the resulting damages and legal costs. Then there is Data Breach insurance. Any business that stores sensitive or non-public information about clients or employees on computers, servers or in physical paper files is responsible for protecting that information. A Data Breach policy will provide protection against financial losses or legal action result from this information being released inappropriately.

Some types of insurance are compulsory. If your business, for example, relies on commercial vehicles for the transport of goods, or the provision of services, then you must have auto insurance to cover bodily injury to drivers, passengers and third parties, as well as any resulting damage, in the event of an accident. And, if you employ  staff of any kind, no matter how big or small your company is, then you must have some form of Employers’ Liability Insurance – or Workers’ Compensation – to provide cover in the event that one of your employees is injured or becomes ill as a result of working for you.

Beyond this, there are no mandated types of business insurance, despite the unscrupulous claims of some insurance providers and service providers which suggest otherwise. UK banks, for example, have been fined and had to pay billions of pounds in compensation for the mis-selling of Payment Protection Insurance (PPI) to their customers.

Choosing the right business insurer for you can be difficult, because few service providers excel in every type of business insurance. One might be a top provider of commercial auto insurance, for example, but offer relatively inflexible product liability coverage. Others might be geared to particular types of industry, or positioned to service large companies and multi-nationals primarily.

Faced with such a choice, your first step should be to review your business carefully and determine what type of insurance you actually need. Then you need to find an insurer that meets those needs. There are literally thousands of insurers and brokers to choose from, so do your research and compare them.

If you are a small or medium-sized firm make sure that your potential insurer really caters to this sector of the market, have sales staff that understand your business, are prepared to give you insurance that meets your needs, and are not trying to sell you unnecessary or excessive cover. Business insurance of some form or other is both a necessity and an investment. Make sure you are getting a good return on that investment.

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