There are many types of business insurances, depending on your industry and unique risks. RamseyTrusted agents can help determine which policies are right for your company.
Most businesses need general liability and commercial property insurance. These are usually offered as a bundle in a policy known as a business owner’s policy (BOP) for small businesses or a commercial package policy for larger companies.
General Liability
Almost any type of business can be affected by an unexpected event. The good news is that there are business insurance policies to help you recover from such events, so your employees can keep working and customers can continue buying your products or services.
General liability is one of the most important types of business insurance for small businesses. It protects your company against claims of harm caused by your operations, including damage to third-party property and bodily injury. For example, if a customer slips and falls on a loose tile in your office and breaks their arm, you might be held responsible for medical expenses and property repairs—but general liability insurance can cover these costs up to a certain limit.
Many clients and contractors will ask to see proof of your general liability policy before they work with you. This is because the terms of their contracts may require you to have this coverage or it could be a condition of hiring your business. In addition, some commercial property insurers offer a general liability policy that is part of their package plan.
Professional liability insurance—often referred to as errors and omissions insurance or E&O—can also be beneficial for your business. If your staff makes a mistake that negatively affects your client, or if they’re accused of slander or negligence, this type of coverage can cover legal expenses and settlement costs.
There are a variety of factors that go into the cost of a business insurance policy, such as your location, the size and risk of your operation, and how long you’ve been in business. It’s a good idea to talk to an agent about your specific needs and how you can minimize risks in order to get the best business insurance quotes.
Workers’ compensation, commercial auto and management liability are other essential policies that may be included in a business owner’s policy. You may be able to find the best rates by purchasing these coverages as part of a package rather than individually. This can save you time and money, and it can be a great way to ensure you’re getting the right coverage for your company.
Commercial Auto
Whether your business is transporting clients, supplies or employees, commercial auto insurance offers protection on the road. If an employee crashes a company car into someone else’s property or your work vehicle is stolen, commercial auto coverage may pay for damages and injuries resulting from the incident. This type of business insurance is especially important for small businesses relying on vehicles to move product or services from point A to point B. Accidents happen, but without adequate business insurance your business could face a financial disaster.
Commercial auto is often included in a business package policy alongside other types of business insurance such as general liability and workers’ compensation. These packages offer cost savings and ease of mind by offering a single payment for multiple policies instead of making separate payments for each policy. It is also easier to keep track of the coverages you have with a single payment.
Some of the key benefits of commercial auto insurance include:
Comprehensive Coverage: This provides protection for your company vehicle against damage caused by fire, wind, hail, lightning, falling objects and other incidents not involving collision. It can also protect your company cars against theft and vandalism. Permissive Users: This type of coverage allows you to extend the coverage of your commercial auto policy to other drivers who use your company vehicles with your permission, such as family members and independent contractors. You can even include a non-owned and hired auto policy in your commercial auto policy as well.
Almost any business that uses vehicles for its operations needs commercial auto insurance, including restaurants with fleets of delivery vans, food trucks, process servers and many other types of small businesses. If an employee uses their own personal vehicle for company-related errands, it is highly recommended that you add them to your commercial auto insurance policy as a permissive user. While personal auto policies exclude any business use, most commercial auto policies will allow employees to add their personal vehicles as well as rented or borrowed vehicles to the policy. If you’re in the market for business insurance, contact us today to learn more about our commercial auto options or start a quote.
Business Owner’s Policy (BOP)
Designed with small business in mind, the business owner’s policy bundles several types of insurance coverage into one easy-to-manage policy. It includes general liability, property and business interruption insurance to protect businesses from common risks like a third-party getting hurt while on the premises or a natural disaster shutting down a company and not generating revenue for a period of time. In order to qualify for a BOP, businesses must meet certain criteria that insurers set out, including business location, size, class of business and revenue.
Generally speaking, this type of policy covers business equipment and inventory as well as any other items owned by the business that are in qualifying proximity (within 100 feet) to the physical location of the business. Typically, this also includes any vehicles used in the course of business as long as the driver is insured under a commercial auto insurance policy. In addition to those property protections, the business owner’s policy provides business liability insurance to cover lawsuits brought by injured third parties. This could be the result of someone slipping and falling on a company-owned floor or if they are harmed by products you manufacture, services you provide or advertising.
The business interruption part of a BOP is particularly useful to ensure that if your company has to temporarily close down due to something out of your control, you will have the resources to keep paying your employees and other bills while you are out of commission. This coverage will also typically pay for expenses that are related to reopening the business.
Many insurance providers offer specialized add-ons for BOPs such as workers’ compensation, professional liability and commercial auto that may better meet the needs of specific industries or risk profiles. In addition, a BOP offers the added benefit of having a single policy that you can show to property managers and major customers as proof that your company has the financial backing to weather any storm.
Ultimately, it is important to note that business owners’ policies do not include worker’s compensation, professional liability, commercial auto or health and disability insurance. For these reasons, it is important to speak with a trusted local agent who can help you decide which types of insurance are right for your unique business risks.
Workers’ Compensation
Workers’ compensation, or simply workers’ comp, is a type of business insurance that protects your employees in the event of a work-related injury or illness. It covers medical expenses and partial lost wages, and it also provides peace of mind to your employees knowing that they are covered should an incident occur. Most states require you to carry a policy of this kind, and it is generally in your best interest to do so.
In order to calculate premiums, insurance companies use a system called class codes that correspond with different types of jobs and associated risks. These are usually determined by the National Council on Compensation Insurance (NCCI) or the state’s workers’ comp bureau. Once you have your job classifications, the insurance company will then assign a “class code rate” that indicates how much per $100 of payroll your business should pay in premiums.
Your insurance provider will also take into account your business’ industry when calculating premiums, with riskier industries paying higher rates. This is done because businesses in high-risk industries, such as construction or contracting, have a greater chance of incurring worker injuries and illnesses. Conversely, businesses in low-risk industries, such as IT or consulting, tend to have lower rates.
You can lower your workers’ comp premium by implementing safety measures and providing employee training. In addition, you should review all documentation an employee signs before they start work to ensure that it fully addresses any potential hazards. You may also choose to implement a workplace wellness program, which is often seen as a more cost-effective alternative to costly workers’ comp claims.
Some businesses opt for self-insurance, which involves taking on the responsibility of processing and paying out workers’ comp claims. This can save on administration costs, but it also comes with the risk of having a large claim that can overwhelm your resources and lead to financial problems.
Most businesses, however, opt for traditional workers’ compensation coverage. This is because, while it does add to the overall cost of running your business, it helps you comply with state laws and prevents lawsuits from employees who are injured by a lack of coverage.
