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Business Insurance?

What Is Business Insurance?

Business Insurance, also known as Commercial Insurance, protects businesses from losses due to unexpected events during normal business operations, such as lawsuits, natural disasters, or accidents. There are many types of commercial insurance for businesses, including coverage for property damage, legal liability, and employee-related risks, among others.

Companies evaluate their commercial insurance needs based on potential risks, which can vary depending on the type of business and its environment. Learn about the types of business insurance and what they provide.

How it Works:

Small business owners must carefully consider and evaluate their risks because they may have personal financial exposure in the event of a loss. Commercial insurance protects business owners from potential losses due to unexpected events that they couldn’t afford to cover on their own. This allows businesses to operate when it might otherwise be too risky to do so.

It is vital for the owners of small enterprises to carefully take into consideration and assess the needs of their business as they have extensive financial exposure in case of any loss. If the owner of the business does not feel that they have the ability to assess business risk effectively and the need for insurance coverage, they must work with an experienced, licensed, and reputable insurance agent. Business insurance protects the SMEs from fire, theft, professional liability, general third party liability, compensation towards workers, medical expenses etc.

Types of Business Insurance:

Different types of business insurance policies are as follows:

Liability Policies:

This policy helps your business bear the cost of liability claims arising from a third party bodily injury or property damage. In case any lawsuit is arsing against your enterprise you may be liable to pay huge legal fees. Without this cover, the entire expense will be on you. The most common liability covers include- general liability, public liability, professional liability and commercial umbrella insurance.

General Liability Insurance:

General Liability Insurance is one of the basic business insurance policy that provides coverage against any liability cost arising out of loss or damage caused to a third party or property. It bears the cost of any legal liability arising out of a lawsuit which otherwise has to be paid by the owner of the business. Whether you operate from a professional space or from your house, you should definitely have general liability insurance.

Professional Liability Insurance:

Professional Liability Insurance is the type of business insurance that provides protection against damages caused in the performance of a service. Also known as Errors and Omissions Insurance, it takes care of any losses that you may have faced because of negligence in rendering any services. Some insurance companies provide professional liability insurance that is specific to a certain profession. You can check with your insurance company to find the specific insurance that suits your profession.

Employee Insurance Policies:

Also known as Workers' Compensation Plan, this policy under company insurance helps the business owner cover the expenses arising out of injuries or illness to employees. It also covers the legal cost faced by the business if a deceased family decides to sue the business. Even, in most countries, especially abroad, it is a mandatory buy.

Property Policies:

If a business is not sufficiently insured against the property damage, the recovery cost will entirely on the owner. Commercial insurance helps the business owner pay the repair or replacement cost of any damaged property. The risk is higher in case of small business, where 40% of business never gets the chance to reopen after a disaster strikes. That’s why you need this policy to protect your business property. It usually includes the physical location of the business, damaged tools, documents, assets or damaged caused by vandals.

Cover for Loss of Income:

This policy helps the insured pay off the fixed costs if the business is unable to operate after a disaster.

Product Liability Insurance:

If your business is into manufacturing, product liability insurance is necessary. It is useful in covering the expenses of a lawsuit arising due to damages caused by your products.

Vehicle Insurance:

Any vehicle used for business should be insured. In India, it is mandatory to have third party insurance, be it a private or commercial vehicle. However, comprehensive insurance will provide end-to-end protection covering own damage as well. Nevertheless, if employees are using their private vehicles, their personal insurance will cover them during an accident or other damages.

Commercial Vehicle Insurance:

Any vehicle that provides commercial services in a business should have a Commercial Vehicle Insurance. It provides protection against any damage caused to the vehicle or the driver or to a third-party in case of an unforeseen incident like a traffic collision, accident, fire, theft, etc. In India, third party insurance is compulsory for all vehicles plying on Indian roads. But to ensure complete coverage, business owners should opt for comprehensive vehicle insurance.

Business Interruption Insurance:

This type of policy is designed for a business that requires a physical location such as retail shops. Business interruption policy comes in handy in case a business faces loss due to the circumstances that cause a commotion to the normal course of business. For instance, if a natural calamity or a riot makes it difficult for employees to come to work, it will lead to the business incurring losses. This type of business insurance policy helps to compensate for such losses.

There are also a few other types of business insurance that are specific to certain kinds of businesses and are tailor-made for their needs. For instance, petrol pump owners can opt for Petrol Pump Insurance, restaurant owners can choose Restaurant Insurance and warehouse owners can choose Warehouse Insurance.