Setting up your own business comes with risks. An unexpected circumstance or accident may occur, so it is most important to have the right insurance in place. Having insurance in place will protect your business and give you peace of mind. Protect yourself and the business from any losses that may occur, by setting up an insurance policy with a reputable insurance company. There are various types of insurance cover available to protect you, your business, employees, and potential customers. We would highly recommend using a reputable company such as Pembroke Insurances for your commercial business insurance cover. Read on for the most important insurance cover for businesses.
What Is Business Insurance?
Insurance is a type of policy or contract in which you as a business owner receives financial protection or reimbursement against losses from an insurance company. Insurance policy is there to help you against a financial loss that may have resulted from damage to your property that is insured or from liability for injury or damage caused to a third party.
There are so many different types of insurance policies that you can purchase in ways of protecting your business, home, life, or health. Before choosing your insurance policy, you must understand the way insurance works. There are 3 components to any type of insurance, and these are important. These include deductible, policy limit, and premium.
The premium is the price and cost you pay typically on a monthly basis. The premium price is decided by your insurance company and established on your business profile risk.
2. Policy Limit
A policy limit is the maximum money an insurer will pay out to the policyholder for a claim or loss. A maximum may be a set period e.g., policy or annual term, lifetime maximum, or per injury or loss. Generally, a higher limit carries a higher premium.
The deductible is the specific amount of money you must pay as the holder of the insurance policy before the claim is paid by the insurer. A deductible serves as a deterrent to an extensive sum of insignificant and small claims.
A deductible can apply per claim or per policy it depends on the type of policy and on the insurer. A policy with a very high deductible is generally less expensive due to the expense out of your own pocket which will result in fewer small claims.
General Liability Insurance
Owning a business general liability is the first type of insurance you must have. Every business, even if home-based needs to have liability insurance. The policy protects you from a variety of claims including personal injury, bodily injury, and property damage. It provides defense and covers damages in a case a product, employee, or service caused or is alleged to have caused some harm or injury to a third party. You must consider liability insurance if you:
- Work or handle client property
- Use social media professionally or personally
- Have a store, building, or an office that’s open to clients, public, or vendors
- Create and advertise marketing materials for your business
Professional Liability Insurance
Professional liability insurance covers a business if a claim is made against you or your business for alleged negligent acts that result from failure or mistakes to perform. This policy is also known as errors and omissions insurance. The policy is applicable for any professional firm including accountants, lawyers, real estate agents, hair salons, consultants, to name a few.
Property insurance is essential, whether you own or rent the building. The insurance policy covers the equipment, furniture, signage, inventory, exterior signs, fences, important documents, and more in the occurrence of a fire, theft, smoke damage, or a storm.
If your location is exposed to such incidents it is important to enquire with your insurance company about the policy. What you pay for your property insurance will depend largely on the value of all your business assets including the building. Other factors that determine your premium cost are based on risk these include:
Occupancy – what is your industry? A business like a repair shop or a restaurant would carry a lot more risk than an estate agent’s office.
Fire and theft protection – Does your business and building have a sprinkler system and a fire alarm? Do you have a security alarm system? How far is the nearest fire station and fire hydrant?
Location – is the location your business is in prone to natural disasters or storms?
Construction – does the building have new or upgraded electrical wiring, HVAC, and plumbing. The cover limits and deductibles that you select.
Like general liability, worker’s compensation should be combined with your business policy. The policy provides covers to all employees for death, medical expenses, rehabilitation, become injured on your premises, or becomes ill while they are working for you. For these reasons, an employee can make a claim against your business which would be very costly. It is essential that your business is covered with worker’s compensation insurance to avoid these legal complications and matters.
Even if your employees are in a low-risk working job, if they have an accident or a medical condition while working for you this may result in an expensive claim made against you. If you don’t have this policy in place you are liable and responsible for any expenses that may occur.
Injuries can happen even in the safest workspaces. If your employee suffers from an illness or has a job-related injury while working for you, then you are liable as a business to cover their medical costs even if they have health insurance.
If your employee is unable to work due to illness or injury on the job, then they will be entitled to a proportion of their earnings. You need worker’s compensation insurance if you are ready to employ staff and have one or more full-time or part-time employees.
Product Liability Insurance
This is a policy for businesses that protects and covers the costs of a claim for compensation made against you if a person sustains an injury or the building has sustained damage by a product you sold. In some situations, even if you haven’t made the product you are still accountable.
If you manufacture products for sale, product liability insurance is essential. The product liability insurance cost is up to you as a business as to how much cover you need.
Commercial Vehicle Insurance
Commercial vehicle insurance protects your company vehicles. You can protect vehicles that carry products, equipment, and employees. With a commercial vehicle policy, you can insure all work vans, trucks, cars, and SUVs from collisions and damage. Once you are insured and someone makes a claim against you, your business will be covered.
If an employee uses their vehicle, and they are involved in an accident their own vehicle policy will cover them. This policy also covers vehicles used for delivering personnel goods and offering a service at a cost.