With all of the considerations that go into managing your business, reviewing and updating your insurance coverage is probably not something you have done recently. You may be thinking that if your business entity is a Limited Liability Company or a Corporation that you may not even need much business insurance? The answer is yes to both. Although, both an LLC and a corporation offer protection of your personal assets neither protects your business from losses. The only way to protect your business from losses is by purchasing business insurance. Commercial Business Insurance is not required by law, yet it is the only way to protect your business from unexpected events such as lawsuits, natural disasters or even the death of a partner. There are five different types of Commercial Business Insurance available. Which one is right for your business?
1.GENERAL LIABILITY INSURANCE- This type of insurance is the most common type. The coverage includes property damage or physical injury. The most basic form of coverage for businesses is Commercial General Liability Insurance it provides coverage for bodily injury, property damage, personal injury such as slander or libel along with advertising injury.
2.PRODUCT LIABILITY INSURANCE- Depending on the type of business that you are operating your business may require this type of insurance in addition to General Liability Insurance.
If your company manufactures, distributes, or operates a wholesale or retail business, then you may want to consider this type of insurance in addition to your General Liability Insurance.
The coverage will protect you from financial losses due to product defects that may cause injury.
3.PROFESSIONAL LIABILITY INSURANCE- If your business provides a service to your customers then you may want to carry this type of insurance as well as General Liability Insurance. Unlike the other types of insurance Professional Liability Insurance covers; inaccurate advice, negligence, misrepresentation, malpractice, errors and violations of fair dealing and good faith. Some forms of businesses are required by law to obtain this type of coverage, such as medical providers.
4.COMMERCIAL PROPERTY INSURANCE-This insurance provides the same basic coverage that regular property insurance covers except it is for commercial property. Frequently businesses possess equipment that is worth millions of dollars. It is important to protect your investment from fire, theft and natural disasters. It can also include lost income, the interruption of business and even company papers. It is generally carried by manufacturing companies, retail companies and service related business along with non-profit organizations. This type of insurance is usually tax deductible as a business expense.
5.HOME BASED BUSINESS INSURANCE- If you are planning on operating a business out of your home you may want to consider purchasing this type of insurance. According to the National Bureau of Labor Statistics 3 out of 10 homeowners operate a business out of their home.
Many people who operate a home based business mistakenly believe that their homeowners insurance will cover their business. Homeowners insurance does not cover claims that arise from your home business, such as office equipment or delivery people who may slip and fall.
You may need to add a rider onto your Homeowner’s Insurance Policy for extra protection.
Regardless of the type of business that you operate, insurance is a very important factor to consider.
DISCLAIMER: The information contained herein is not intended to be specific legal advice for your particular situation. It is meant to provide general information on the changing landscape of the law. You are encouraged to contact legal counsel for advice specific to your particular legal situation.