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What Does Business Insurance Cover?

Sep 06, 2018

Business insurance is no different from home insurance, personal, or auto insurance. Insurance has your back when disaster strikes. Business insurance is necessary to provide coverage for employee-related issues, damages, lawsuits, as well as risks pertinent to the type of business.

Small business owners have a greater need for business insurance due to the personal funds invested in the business. This could pose a serious problem in the event the business goes under. The owner could lose whatever he put into the business such as a second mortgage on his home or a loan against any property he might hold.

There is a risk to almost everything. Business owners will assess the risks in their particular business and buy coverage for those risks. Should the owner not be well skilled in this area, he will seek the advice of a reputable insurance broker. An online search will yield these brokers.

What Does Business Insurance Cover?

1 - Property Insurance

If business owners own a brick and mortar store or office, then the property should be protected. Any inventory or furnishings, signs, and equipment will be covered from fire, theft, and storms like hurricanes and bad thunderstorms. Natural disasters such as earthquakes or flooding aren't covered by ordinary business insurance. The business owner will need a separate policy.

2 - Liability Insurance

Each industry has its own risks. There are two types of business liability insurance: general and product liability insurance. General liability covers the customer who slips and falls on your property. It covers advertising liability such as misrepresentation or someone who was offended by a passage in a blog or newsletter. You could be accused of slander if you misquoted someone.

Product liability covers whatever you produce that could harm someone. For example, let's say you make a personal care product or a diet formula. If it makes someone ill or produces a skin problem like a rash, then you could be held liable. This insurance covers you in the case of a lawsuit.

3 - Home Based Businesses

Business insurance doesn't cover most home based businesses. Homeowners insurance doesn't cover it, either. If you stock a product or provide a service, and if your business is conducted in a separate structure like a shed or above a separate garage, then most insurance companies have something that will cover it.

4 - Business Vehicle Insurance

If you use delivery trucks or cars with your service printed on car signs, then you'll need business vehicle coverage. This will protect you in the event of a crash, or if a tree limb falls on your parked vehicles.

5 - Business Interruption Insurance

This type insurance covers your business when it's forced by outside circumstances to close. This might be the power being out due to a bad storm or damage to the structure. When normal business operations are interrupted, causing a loss of income to the owner and employees, then this insurance will cover it.

Extra expense insurance covers you if you must relocate your business temporarily due to outside causes to the original structure. Rent, moving costs, and equipment leases will be included in such a policy. Payroll insurance covers the employees during this period, so they won't be forced to find other employment.

6 - Fidelity Insurance

This type of insurance is called bonding. It protects the business owner from employees who embezzle, who perpetrate fraud, and who use company technology for their own purposes. You will be protected against employees with access to the bank accounts and any company assets. Businesses with financial officers, cashiers, and company supervisors with access to funds will benefit from fidelity insurance.

7 - Insurance Against Vandalization

Some business can expect break-ins, vandalizing, and theft of all sorts. Convenience stores and gas stations come to mind. Customers and employees sometimes steal. Most companies use security personnel, personal shoppers, security tags and other means of security to cheat customers and employees of stealing. Some companies don't bother with it because their theft insurance will cover any shortages. However, this kind of insurance will give the business owner some sense of security against theft.