Insurance can be defined as the equitable transfer of risk from one entity to another in exchange for money. Insurance is a contract where you pay a premium, so that an insurer will compensate you for particular events such as losses, injury, illness or death.
The term – “business insurance” pertains to protecting a business against any operational loss, property damage, product loss, legal liability, or other employee related risks.
There are several types of business insurance – each with its own type of coverage and restrictions. Every business’ needs are different and choosing the right coverage for your company is very important.
The most common types of business insurance are as follows:
Key Person Insurance – This is for self-employed individuals or small enterprises who rely on a few key people to run the business. This coverage includes critical illness, disability and life insurance.
Liability Insurance – Every business, even if it’s home-based, needs to have liability insurance. This coverage protects the business against liability claims, negligence, manufacturing or personnel error, product damage, bodily injury and even property damage.
Product Liability Insurance – This covers damages, injury or death caused by faulty products.
Property Insurance – This will cover the business’ properties in the event of damages due to fire, flood or other natural perils.
Vehicle Insurance – Similar to insurance for personal vehicles; all business vehicles should be insured too against accidents, losses, damages, thefts, collisions.
Business Interruption Insurance – Unforeseeable circumstances may force a business to shut down temporarily. This insurance will cover loss of earnings until normal business resumes.
Accounts Receivable Insurance – There are certain wholesale and export businesses whose clients take more than 30-60 days to pay, and in some cases, clients disappear without paying. This leaves the business in a very critical position, since the business has to pay their employees, suppliers, bills and other expenses. This type of insurance will provide crucial coverage during this vulnerable period.
Professional Liability Insurance – Also known as errors and omissions (E&O) insurance, this covers a business against negligence claims due to harm resulting from mistakes or failure to perform. This type of coverage is mostly taken by professional business – like doctors, lawyers, real estate agents and many more.
E-Commerce Insurance – In recent years, the Internet has emerged as a major business tool for companies both large and small. This has led some insurers to introduce policies that protect businesses in the event that their online presence is disrupted by hackers or other problems.
For a business, insurance is the anchor that keeps the entire operation from being swept away in stormy conditions. Insure your business properly to cover the loss against risk.
U. Lakhia | DBPC Blog