Business Insurance 101

What is business insurance? How does it work...

• Business insurance comes in a variety of forms, covering everything from property damage and consumer lawsuits to employee injury. Here are some general forms of business insurance:
  • Business Property: Covers physical damage or loss due to natural perils, theft, vandalism, and other catastrophes.
  • Commercial General Liability: Protects against personal injury claims and other lawsuits, resulting from on-site accidents, defective products, substandard work, and other issues.
  • Business Owners Policy (BOP): An economical business insurance policy that packages business property insurance and general liability coverage.
  • Professional Liability Insurance: More specialized liability insurance that protects against claims of professional error, omission, and negligence.
  • Employment Practices Liability Insurance: Offers protection against harassment, discrimination, and wrongful termination claims that are not covered under general liability.
  • Worker's Compensation: State-mandated, no-fault insurance, covering employee injury and illness.
• Before granting coverage, insurers evaluate the risk of insuring each business. As part of this process, agents visit the business's premise. The more a business manages its own liabilities, the lower its premiums will be.

Benefits of business insurance...

• Protect your investment in costly inventory and capital assets, such as heavy machinery and specialized equipment.
• Avoid bankruptcy due to catastrophic loss from accidents, fire, flood, theft, vandalism, and other perils.
• Insure against employee complaints or suits, which can lead to devastating legal costs and plaintiff rewards.

Tips for lowering business insurance costs...

• Maintain adequate lighting throughout your premises to limit customer and employee mishaps. Keep carpeting, electrical wiring, elevators and escalators, flooring, and stairways in good shape. Install a security system and fire-prevention devices, such as sprinklers and smoke and fire alarms.
• Limit the amount of cash in the register (if applicable).
• Retain good records of inventory, accounts receivable, and equipment purchases. Keep a second set of records off-site with an accountant, insurance agent, for example.
• Hire and keep employees with good driving records.
• Discuss safety practices with employees. Educate them about proper lifting techniques and necessary safety equipment, such as goggles, gloves and respirators (if applicable).
• Contact a risk management consultant, who can advise you on state safety and environmental regulations.