Deciding to start a business and then expanding it over time to include an office and employees is a significant commitment. Many things must be set up correctly to create a successful enterprise; however, there are also inherent risks as a result of being a business owner too.

In this article, we discuss the risks that are present as a business operator and how they are best managed to avoid difficulties arising later.

What is Business Insurance and Is It Necessary?

First, business insurance isn’t a single product or type of insurance coverage that you take out. Instead, it’s a broad term covering many possible types of insurance available to protect companies from a variety of potential risk factors. As such, a business takes out a type of insurance for businesses or several types in most cases.

Second, state laws vary for businesses as to which business insurance types are required to operate a business in that state. Some are optional, and others are compulsory. Indeed, because of this, some insurers offer some forms of insurance in some states but not others. Therefore, it’s necessary to check what the state requirements are.

And third, for optional insurance, this should be examined closely to understand the type of cover it provides and instances where it could potentially assist you in protecting your business from difficulties. Just because it’s not compulsory in your state doesn’t mean you should ignore it – it only means it’s not legally required.

Professional Liability Insurance for Errors and Omissions

A company can get into hot water when a customer (or even someone who’s been impacted in some way) feels like they have been financially harmed.

Usually, this arises due to something that went unstated or an error that an employee made as a worker for the company. Often, this happens when something completely unexpected transpires that hadn’t occurred before and so wasn’t anticipated ahead of time.

This type of insurance is often required by a state to operate a business there.

General Liability Insurance for Broader Coverage

A general liability insurance policy is also a good one to take out.

The idea with this broader policy is to protect from an accident on the premises or elsewhere, which happens through an employee’s actions (or inactions). Any accident that injures someone also falls under this general type of policy. Property damage is usually part of the coverage too.

Claimed injuries, either through advertising or other means, can create a claim against the business too. This includes problems like libel or when someone feels they have been slandered. This could result from a comment or an advertisement that the company puts out that was openly critical in a way that’s deemed to be unfair or unjust.

When it comes to coverage, there are clear benefits to getting general liability insurance coverage when operating a business from premises, when having employees, or that mentions other people, companies, or brands during the course of its business. To get the best policy, consider talking to The Hartford. They have provided business insurance policies since the early 1800s and can offer business insurance to cover your company against many different risks.

Commercial Property Insurance for Asset Protection

As a business owner, when the company owns essential equipment/tools, stock inventory in a warehouse, or even the furniture, this is costly to replace.

Also, the business operates out of premises such as an office or uses a warehouse, which must stay operational to continue to conduct business.

Commercial property insurance aims to protect companies from losses, such as not being able to use the premises, equipment, stock, and other valuables that it relies upon. Therefore, should lightning strike the building creating a surge that blows all the electrical devices, a fire sweeps through the building leaving destruction in its wake, or another damage occurs, there’s an insurance to cover that.

When the business cannot operate for a period due to a significant business setback like the ones outlined above, then there’s a ‘covered loss’ protection too.

Additionally, it’s possible to add extra protection beyond a standard policy to cover the costs of offsite storage, relocating records to prevent their loss, and creating new versions of vital documents to preserve their information.

Protection for Lost Business Income

One additional aspect of the business operational aspect is an ongoing business income.

Business operations can get interrupted by many unexpected things. At that point, work halts and income falters, making it challenging to keep the company afloat.

A typical situation where this may occur is with a fire at the work premises (60 percent of businesses are found to have closed within two years of a fire). A break-in or a bad weather cycle causing extensive physical damage to property or other assets are other causes. However, the reasoning and details behind a business closure vary substantially from case to case.

Business income insurance (aka business continuation insurance) aims to protect against an outright loss.

Workers’ Compensation Insurance

To assist companies in providing benefits to an employee who has gotten ill because of something at the premises or sustained an injury while there, workers’ compensation insurance is available. The majority of states require that businesses take out this insurance too.

In addition to providing benefits for illnesses and accidents, a policy also allows for the provision of benefits paid to a workers’ descendants when it’s determined that the employee passed away because of their role in the company.

Given how litigious it is in the business environment, owners need to protect themselves from potential litigation, the cost of settlements and losses to essential assets, or through business interruptions. While some forms of insurance are necessary to take out with fines or worse when failing to insurer appropriately, many other forms of insurance are relatively inexpensive and provide useful cover to protect from a wide variety of risks. After all, it pays to protect what you’ve worked so hard to build – don’t make the mistake of being underinsured.