Like all insurance, business insurance can sound a bit intimidating, especially if you don’t know much about it. And as a business owner, you probably have limited time to spend on ancillary subjects as it is. But any good business owner knows that business insurance is anything but inconsequential. A good business insurance policy can make or break your company in the event of an accident or disaster, and it helps to keep your workplace functional and safe.
But knowing the ins and outs of business insurance is for the experts, so we’re just here to cover some of the basics, as even a little bit of information can go a long way. And at Weed Ross, we not only value your business, but we also value your time. So let us be the experts, and let’s let you be the business owner that you are. And while we’re both doing what we do best, we thought we’d dive into the core principles of business insurance—this is Business Insurance 101.
In this article, we will cover:
- What Exactly Is Business Insurance, Anyway?
- What Does a Standard Business Insurance Policy Cover?
- What Are the Different Types of Business Insurance?
- Is Business Insurance A Requirement?
- Do I Need Business Insurance if I’m Running an LLC?
What Exactly Is Business Insurance, Anyway?
Business insurance is designed to protect business owners, employees, customers, and the businesses themselves from potential losses during the course of daily operations. Sometimes referred to as commercial insurance, business insurance exists solely to cover financial assets, property, and equipment from all sorts of unwanted incidents, like theft, injury, vandalism, lawsuits and more. Business insurance covers all types of business and provides coverages that other types of insurance doesn’t. For example, if you’re running a business out of your home, home insurance won’t protect your business assets, but business insurance would.
What Does a Standard Business Insurance Policy Cover?
Most business insurance policies provide a few basic coverages, such as business property coverage, general liability coverage, and workers’ compensation. These foundational coverages protect your company from most of the things that could possibly go wrong in a normal business environment. Let’s take a closer look at each of these coverages specifically:
- Business property coverage: covers direct losses when property is stolen or damaged.
- General liability coverage: covers personal or advertising injury, medical bills, damage from general operational incidents, and losses pertaining to products.
- Workers’ compensation: protects you, your business, and your employees by covering medical costs and lost wages from injured or sick workers.
What Are the Other Different Types of Business Insurance?
Every business faces different challenges, distinct risks, and unique threats, and while the above coverages protect most businesses from the common concerns, there are several different types of business insurance coverages for everything else. As a business owner, it’s important that you obtain the right coverages for your particular operations and needs. That’s precisely why there are several different types of coverages. Possible additions or alternatives for your business insurance policy include:
- Data breach insurance: protects you in the event that digital property gets lost or stolen.
- Business umbrella insurance: covers excess liabilities that standard liability insurance might not cover.
- Business auto insurance: different from auto insurance, as it protects vehicles that are owned, leased, hired, or borrowed by a company for business purposes.
Is Business Insurance A Requirement?
Business insurance is absolutely essential if you’re owning and operating a business. It’s critical that you protect yourself and your employees from dangerous potentialities and risks, even if you don’t think your business is particularly susceptible to them. Sometimes the most unpredictable and unlikely turn of events can ruin a perfectly good business model, and you want to be prepared for those instances. That way, a silly accident or an unfortunate stroke of bad luck at your business doesn’t affect the other aspects of your life too.
Do I Need Business Insurance if I’m Running an LLC?
An LLC is also a business, so yes—business insurance is just as crucial for an LLC or a sole proprietorship as it is for any other business model. Additionally, as a sole proprietor, you could be held personally liable for business related incidents, which means that personal assets like your home, car, and bank accounts are fair game for collateral. The business insurance experts at Weed Ross recommend at least a basic business insurance policy for every type of business under the sun.