It doesn’t matter if you’re an eager entrepreneur or a seasoned industry-veteran, there’s one topic that nearly every business owner doesn’t like thinking about. Yes, that’s right, we’re talking about insurance. There’s nothing flashy, exciting, or “cool” about insurance. Yet, it’s one of the most important aspects of any business operation. Without a proper risk management policy (e.g. having the proper types of insurance), your business has a major liability that could ultimately result in its failure. Do we have your attention now? Thought so.
There are countless types of business insurance. Property, auto, advertising, etc. The list is huge, and although you don’t need every single type of insurance out there, you would be wise to at least have a few off the following list. Below we cover ten of the most important types of business insurance currently on the market.
Commercial Vehicle Insurance
This type of business insurance is incredibly common, and if your business utilizes vehicles in any way, shape, or form, it’s an absolute must. Commercial auto insurance will protect your company’s vehicles from damage and accidents. Learn more about commercial auto insurance here.
General Liability Insurance
General liability insurance that everyone knows about, but few really understand its importance. Unless your company has millions upon millions of liquid cash (hint: it doesn’t), it’s going to need liability insurance. What exactly does liability insurance protect against? Mostly lawsuits and related legal actions. Believe it or not, but there’s actually over five different types of liability insurance, all of which we detail below.
Note: If you need several different types of liability policies, it’s recommended to purchase an umbrella policy that will provide greater levels of coverage across different areas.
Commercial General Liability
This is the main type of liability insurance that people think of when they hear the term. CGL policies protect businesses from lawsuits that originate from personal or property injury claims. If you’re interested in getting general liability insurance quotes, remember to review more than just one company.
Directors Liability Insurance
This type of insurance policy only serves the directors or officers of a company. It’s really only used by large organizations, and it’s used to protect against any claims made by lower employees (or customers, shareholders, competitors, etc.).
Indemnity insurance is primarily used by companies who provide consultation services to other companies/individuals. It’s essentially only used when the customer/client files a lawsuit against the company for making a mistake in their consultation/service.
Crime insurance protects businesses against losses that stem from theft, burglary, robbery, etc. (and this applies to both employee-theft and theft committed by outside parties).
Cyber risk insurance policies allow businesses to have peace of mind knowing that their cyber assets are properly protected. This type of policy mainly involves covering the recovery/repair process after a data breach (which can be very costly to large businesses).
Commercial Property Insurance
Business property insurance (often called commercial property insurance) protects a company’s buildings (as well as the equipment within the building – i.e. computers and electronics). This type of insurance is very important to have if you own the building where your business is located.
You’ve probably heard of worker’s compensation. This type of insurance provides financial payments to employees who’ve been injured while working. One of the reasons why workers’ compensation is so popular is because it makes the employee unable to file legal action against their employer (for their injury). Although different states have different laws regarding workers’ compensation, if you employ W-2 employees, you’re required to have a workers’ compensation policy.
Errors and Omissions Insurance
Otherwise known as professional liability insurance, “errors and omissions” insurance defends consulting/services companies against clients filing lawsuit for faulty advice. This is a vast oversimplification though. There is a lot more that you would need to learn before buying this insurance.
BOP insurance stands for Business Owner’s Policy insurance. This is actually a type of umbrella policy, that includes several different coverage types under one policy for easier management. One of the main benefits of having this type of policy is that you don’t need to worry about managing numerous policies, because they’re all under one standard policy (from one insurance provider as opposed to several).
No matter what your specific insurance needs are, odds are that the above list covered at least some of them. Remember, when you’re looking for insurance policies don’t only look at price. There are numerous factors that should go into your decision making process, and while the price of the policy is certainly one of them, it can’t be the only one.