Are You Properly Protecting Your Business Assets With Insurance?
By Tyler Olson, CPA, Owner, Tyler James Advisory
Having the right commercial insurance can save your business from several liability claims, which can hurt or destroy your company. Insurance allows you to pay a reasonable monthly fee to protect against the unforeseen. No business can predict every event that can go wrong and prepare for it. Insurance can cover your business, in most cases, entirely, from claims that could damage or ruin your company. Below are several insurance options to consider depending on the industry of your business. Note, this is not a full list of all insurance options for businesses; this list contains the most common types of commercial insurance.
Commercial General Liability
Commercial general liability insurance protects a business from liability claims relating to injury, property damage, advertising errors, and more. This is a must-have for most companies to protect themselves from most claims, including:
Bodily Injury - covers claims that your business or employees caused someone harm
Property damage - includes claims your company damaged someone’s property
Reputation damage - protects against malicious prosecution, slander, privacy violations, and more
Damage to leased property - covers claims for a property you rent that is damaged by fire, lightning, or explosion
Commercial general liability also includes various other claims making it the broadest insurance coverage option. This is a great starting point if you are looking to get your comprehensive business protection at a reasonable cost.
Professional Liability (E&O)
Professional liability insurance, also known as errors and omissions insurance (E&O), covers professionals that own CPA firms, law firms, etc. This insurance protects the business against claims due to negligence, such as a mistake in a financial report, or failure to perform an agreed upon service.
This coverage varies widely depending on your specific industry but is a must-have for professional businesses. Lawsuits for negligence can happen at, and it is best to be covered in case the worst happens. E&O insurance helps cover the cost of lawyers, investigative work, and settlements that can come with negligence claims. The coverage is generally cheap and worth the protection for professional companies.
Property Insurance
If your company has an office space, property insurance can help protect your office. This includes both leasing and owning of office space. Property insurance covers costs relating to fire, storms, and theft. This is especially crucial for warehouses with merchandise and offices along the coast. Property insurance can help ensure that if something terrible happens to your office, warehouse, or other places of business, you are covered.
Workers Comp Insurance
Businesses with one employee to thousands of employees should have workers compensation insurance. Workers comp insurance protects your company from medical, disability, and other related claims from your employees. While some smaller employers might think this is unnecessary, that is wrong. Workers compensation claims are common and costly. Having this low-cost insurance will protect you and your company while helping to ensure your employees can get the help they need. Workers comp insurance can even cover things like carpal tunnel claims, so no company with employees should think they are exempt.
Product Liability Insurance
Product liability insurance protects your company from lawsuits relating to damages caused by your product. This can be an allergic reaction to your fabric, choking on a toy, etc. If you are in the business of selling products, I highly encourage you to look into product liability insurance. Claims resulting from product liability are costly and can happen to almost any product. This coverage will save you the headache and can also save your business if a claim does arise.
Business Interruption Insurance
Business interruption insurance covers lost income due to disaster or catastrophe. This is important if you have a physical location and cannot operate without it. Business interruption insurance covers your income while you get back up and running. This is especially important to areas prone to disasters. You never know when a hurricane is going to hit your warehouse and knock you out of business for months on end. This can ensure it doesn’t completely put you out of business.
Commercial Umbrella insurance
If your company has insurance with lower coverage limits or you want additional protection, a commercial umbrella policy can be useful. This insurance extends your liability coverage beyond the standard policy limits. If a claim comes in higher than your general liability insurance limit, this insurance coverage will kick in and cover the remaining, up to the higher limit.
Insurance is crucial to protecting your business and ensuring it can continue. There are many different types of insurance, and coverage can vary depending on your industry. I would recommend talking to an insurance professional to ensure you are getting the right coverage.
Disclaimer: This blog is written for purely discussion and general information. It should not be used as legal and/or tax advice. This blog is not a substitute for consulting with legal council or your CPA.