What does business insurance cover?

Your business wouldn’t be much without your customers and clients. Unfortunately, interacting with clients brings the risk of lawsuits, which are not cheap. The good news is there are several business insurance policies to help manage the risks presented by clients and members of the public.

Consider these scenarios when reviewing insurance options and determining what will be the right coverage for your company:

• A customer has a slip-and-fall accident on your property. General liability insurance can help pay for immediate medical expenses and lawsuit costs if you're sued over a non-employee's injury or property damage. This policy can also be valuable for independent contractors
• Your client loses business income after taking your professional advice. Professional liability insurance (also called errors and omissions insurance) generally pays for your defense if a client alleges you made mistakes that cause them financial loss or property damages
• An employee loses their laptop, exposing your clients' financial information. Cyber insurance helps cover the cost of notification, credit monitoring, and other expenses if sensitive digital information is jeopardized
• An overserved patron hurts someone at your bar. In all 50 states, a business can be held liable for alcohol-related damages, including fighting injuries and damage to patrons' property. In 42 states, a business can be liable for damage caused by drunk patrons after they leave. Liquor liability insurance can help manage those risks

Employees and managers help your business grow, but they also introduce more risks to your daily operations. For example, when you have employees, you can be liable for their workplace injuries and violating their work rights.

Here are a few situations where business insurance can help:

• Your employee is hurt on the job. Some industries are inherently safer than others, but even office workers can be exposed to work-related injuries. Most states require employers to carry workers’ compensation insurance, which covers employees' occupational injury expenses
• An employee sues your business over workplace discrimination. Employment practices liability insurance can cover disputes stemming from the employer-employee relationship
• Businesses with a board of directors may want directors and officers insurance. D&O insurance addresses disputes over decisions the board makes on behalf of the organization

It's easy to imagine how a fire could devastate a business. For that reason, small business owners often purchase commercial property insurance (also referred to as business renter's insurance) especially if they own specialized or valuable business property. When certain weather events or disasters strike, it can help cover the cost of repairing and replacing your property.

Property insurance also protects against burglary and theft, two of the most common small business claims.

Many Insureon customers are eligible for a business owner’s policy (BOP), which bundles property insurance and general liability. It’s usually less expensive than buying the policies separately.

Small and medium-sized businesses with higher risks often look into purchasing a commercial package policy (CPP), which operates similarly to a BOP, but offers more flexible protection options to meet their increased levels of risk.

Other useful property insurance policies you should consider include:

• Inland marine insurance covers products, tools, and equipment while being transported over land or stored off-site
• Contractor's tools and equipment insurance, also known as equipment floater insurance, helps contractors and those in the construction industry cover the cost of replacing tools and equipment that are lost, stolen, or damaged while in transit or at a job site
• Business interruption insurance helps with the cost of day-to-day expenses, lost revenue, and relocation from a business interruption

Small business owners are often unclear about the coverage they need for their vehicles. Many think they can drive their personal auto for business because it’s insured, but that can be a costly mistake if you or your employee gets in an accident. Vehicle claims average $45,000 for small business owners, according to a study by The Hartford.

That's why it's smart to carry additional coverage if you drive for work, especially if:

• You have a business-owned vehicle. Whether you have a fleet of delivery vans or a single automobile, a vehicle registered in your business's name requires commercial auto insurance
• You ask employees to drive their personal vehicles for work errands. Your business can be liable for accidents involving personal vehicles that are used for business purposes. When that happens, hired and non-owned auto insurance can help cover lawsuit expenses

For more information on these two policies, read “Commercial auto insurance vs. hired and non-owned auto insurance.”