A business is exposed to many risks that can negatively affect its financial position. A catastrophic event or a law suit can drain the financial resources of a firm. So in order to protect your business from such types of risks, insurance companies offer to take care of those risks in return for periodic payments called premiums.
Whether you are a small business owner, an entrepreneur or an established business, you need certain types of insurance policies to protect your business. Here are some insurance types that are recommended to be purchased by businesses.
Errors and Omissions Insurance
No human is perfect, everybody makes mistakes. If your business provides professional services or advice, it is possible that your advice or service leads to the financial loss of a client. Such events generally trigger a lawsuit against the company by that particular client. Even if the client’s argument is baseless, the legal fee can be daunting. This is when your errors and omissions insurance policy comes into play and helps to protect your financial resources by paying your legal fee or the court award.
Businesses that provide the following professional services should consider purchasing Errors and Omissions Insurance:
Investment Advisory Services
Web and Graphic Designing
Employment Practices Liability Insurance
Not only can your clients sue you, but your employees can do so too if they feel that their legal employment rights are breached or violated. In that case, the famous Harvey Specter may not help you, but your employment practices liability insurance will surely do. This is a standalone business policy and will reimburse the legal fees and charges that the business has incurred in protecting itself in the court whether a case is won or lost by the business.
Business Interruption Insurance
Most of the small businesses purchase commercial property insurance but neglect purchasing business interruption insurance. Physical assets are important to insure but if your income is dependent upon those physical assets, then the income stream lost due to the loss or damage to those physical assets will result in losses and you will risk losing your customers or not having enough money to get your business back up and running. Business Interruption Insurance step in if the damage to property of physical assets temporarily halts your business operation. This insurance will pay you the income that you would otherwise have earned if the risk event had not occurred. It is not a stand-alone policy and has to be added with other insurance policies like Business Owners Policy, Commercial Property Insurance, etc.
This is a mandatory type of insurance in most states that every business should purchase before employing the workforce for its business operations. If an employee is injured or deceased during the course of his work, a business can be sued because of negligence. This insurance covers the employer if the injured employee sues the company and it also compensates the employee for illness, injury or death (dependents are paid by the insurance company).