Running a business comes with a lot of risks. It’s important to protect yourself and your company with the right type of insurance. There are many types of insurance available that cater to different types of businesses. Here are some of the most common types of insurance for business.
General Liability Insurance
General liability insurance is a policy that covers your business from legal claims due to bodily injury, property damage or personal injury. This policy is designed to protect you from lawsuits that may be filed by anyone who is injured while on your property, or as a result of an accident caused by your business.
In addition, general liability insurance covers damages and claims incurred due to advertising, copyright infringement or libel. Most businesses are required to carry this type of insurance to protect themselves from such lawsuits.
Who Needs General Liability Insurance?
General liability insurance is important for businesses of all sizes and types. It’s particularly important if you operate a business that involves physical labor, such as construction or landscaping. It’s also important if you own a storefront or operate a business where customers visit your property.
If you provide professional services, such as consulting or accounting, you may also need professional liability insurance, which we will discuss in more detail below.
What Does General Liability Insurance Cover?
General liability insurance covers many different types of claims, including:
Claim Type |
Examples |
|---|---|
Bodily Injury |
Slip and fall, injury caused by a product |
Property Damage |
Damage to a customer’s property caused by your business |
Personal Injury |
Libel, slander, copyright infringement |
What Does General Liability Insurance Not Cover?
General liability insurance does not cover:
- Employee injuries: Your employees are not covered under general liability insurance. You will need to purchase workers’ compensation insurance to cover employee injuries.
- Professional services: General liability insurance does not cover damages or claims related to professional services. For this, you need professional liability insurance.
- Intentional acts: General liability insurance does not cover intentional acts, such as assault or battery.
Professional Liability Insurance
Professional liability insurance (also known as errors and omissions insurance) covers damages and claims incurred due to negligence or mistakes in professional services provided by your business. This type of insurance is particularly important for businesses that offer professional services, such as lawyers, accountants, consultants or real estate agents.
Who Needs Professional Liability Insurance?
If your business provides professional services, it’s important to have professional liability insurance. This type of insurance is not required by law, but many clients may require you to have it before they work with you.
What Does Professional Liability Insurance Cover?
Professional liability insurance covers damages and claims related to:
- Negligent acts: Professional liability insurance covers damages and claims that result from negligence or mistakes in professional services provided by your business.
- Errors or omissions: This type of insurance covers claims and damages that result from errors or omissions in professional services provided by your business.
- Legal defense costs: Professional liability insurance also covers legal defense costs, even if the claims are groundless, false or fraudulent.
What Does Professional Liability Insurance Not Cover?
Professional liability insurance does not cover:
- Bodily injury: This type of insurance does not cover bodily injury or property damage caused by your business.
- Intentional acts: Professional liability insurance does not cover intentional acts, such as fraud or criminal activity.
- Employee injuries: Your employees are not covered under professional liability insurance. You will need to purchase workers’ compensation insurance to cover employee injuries.
Workers’ Compensation Insurance
Workers’ compensation insurance covers medical expenses, lost wages and rehabilitation for employees who are injured or become ill as a result of their work. This type of insurance is required by law in most states for businesses with employees.
Who Needs Workers’ Compensation Insurance?
If your business has employees, you are required to have workers’ compensation insurance. This type of insurance covers injuries or illnesses that occur as a result of their work, regardless of who is at fault.
What Does Workers’ Compensation Insurance Cover?
Workers’ compensation insurance covers:
- Medical expenses: This type of insurance covers medical expenses related to the injury or illness.
- Lost wages: Workers’ compensation insurance covers lost wages for the time the employee is unable to work due to the injury or illness.
- Rehabilitation: Workers’ compensation insurance covers rehabilitation costs to help the employee recover from the injury or illness.
What Does Workers’ Compensation Insurance Not Cover?
Workers’ compensation insurance does not cover:
- Injuries outside of work: Workers’ compensation insurance only covers injuries or illnesses that occur as a result of work-related activities.
- Intentional acts: Workers’ compensation insurance does not cover injuries or illnesses that result from intentional acts, such as fights or self-inflicted injuries.
- Independent contractors: Workers’ compensation insurance does not cover independent contractors. If you hire independent contractors, they are responsible for their own insurance.
Property Insurance
Property insurance protects your business property, including buildings, equipment and inventory, from damage or loss caused by fire, theft, vandalism or natural disasters. This type of insurance is important for businesses that own property.
Who Needs Property Insurance?
If your business owns property, it’s important to have property insurance. This type of insurance protects your business from financial loss if your property is damaged or destroyed.
What Does Property Insurance Cover?
Property insurance covers:
- Buildings: This type of insurance covers damage to your building caused by fire, theft or natural disasters.
- Equipment: Property insurance covers damage or loss to equipment, such as computers, printers or machinery.
- Inventory: This type of insurance covers damage or loss to inventory due to fire, theft or natural disasters.
What Does Property Insurance Not Cover?
Property insurance does not cover:
- Intentional damage: Property insurance does not cover damage caused intentionally by the business owner or employees.
- Floods or earthquakes: Property insurance does not cover damage caused by floods or earthquakes. You will need to purchase separate insurance for these events.
- Employee injuries: Your employees are not covered under property insurance. You will need to purchase workers’ compensation insurance to cover employee injuries.
FAQs
What is liability insurance for a business?
Liability insurance for a business is a type of insurance that protects the business from legal claims due to bodily injury, property damage or personal injury. This type of insurance covers damages and claims incurred due to advertising, copyright infringement or libel.
What is the difference between general liability insurance and professional liability insurance?
General liability insurance covers damages and claims related to bodily injury, property damage or personal injury. Professional liability insurance (also known as errors and omissions insurance) covers damages and claims that are related to negligence or mistakes in professional services provided by your business.
Do I need workers’ compensation insurance if my business doesn’t have any employees?
No, you don’t need workers’ compensation insurance if your business doesn’t have any employees. Workers’ compensation insurance is only required for businesses with employees.
What is property insurance for a business?
Property insurance for a business is a type of insurance that protects your business property, including buildings, equipment and inventory, from damage or loss caused by fire, theft, vandalism or natural disasters.
Do I need all of these types of insurance for my business?
Not all businesses need every type of insurance. The types of insurance you need depend on the nature of your business and the risks involved. Consult with an insurance professional to determine the best coverage for your business.
Protecting your business with the right type of insurance can give you peace of mind and help you avoid financial losses in the event of accidents or lawsuits. Make sure you understand the types of insurance available and consult with an insurance professional to determine the best coverage for your business.