All businesses must have comprehensive insurance well before they open their doors to the public. In addition to being a legal requirement, business insurance is also your first line of defense against countless problems ranging from natural disasters to wrongful termination lawsuits. Here is a closer look at how these policies work and what type of coverage you should be looking for.
Understanding Business Coverage
A business owners policy (BOP) protects your company against financial loss in the event of a covered peril. Most basic policies include coverage for theft, vandalism, fires, wind damage, and falling objects. You will also receive some financial assistance if any lawsuits are directed at your company or employees. Once you have a basic policy, you can then decide which additional perils you would like to have covered.
Professional and Product Liability Coverage
Also known as errors and omissions insurance, professional liability insurance gives you additional support if an outside party claims that you didn’t do your job properly. This type of coverage is ideal for real estate agents, lawyers, consultants, and other professionals who offer a specific service. Product liability policies are similar to professional liability policies, but they protect you against claims regarding your products.
Many business owners are surprised to hear that they need separate policies for private vehicles that are used for company purposes. Even if the driver has their own insurance, an additional policy will be needed for the vehicle if they ever drop off products or run errands for the company. Some drivers might even void their personal insurance if they use a private vehicle to transport products or pick up clients. Commercial vehicle insurance covers property damage, lawsuits, and personal injuries in the event of a collision.
There may come a point when it makes sense to add umbrella coverage to your business insurance policy. This type of add-on extends and increases your current coverage for liability suits, property damage, and business interruptions. As soon as your basic policy is exhausted, the umbrella insurance will immediately activate. Business owners should consider this type of coverage if they have significant company assets to worry about.