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When you are a small business owner, it is essential to anticipate and plan ahead to any sort of issues your company might encounter in the future. This means taking into account not only the small day to day operations, but the worst case scenarios that jeopardize the financial health and the very foundation of your business. Everything from vandalism, fires, lawsuits or employee injuries could potentially bankrupt your finances and ruin your company’s reputation. It could not only affect your ability to do business, but your ability to stay in the industry itself. This is why almost all business utilize a safety net to protect them from such a catastrophe. Liability insurance safeguards you from these risks in exchange for a monthly or annual premium. Depending on the package you choose, it covers everything from legal expenses to medical treatment for the aggrieved parties. If you have a small business, it is imperative that you study the various risks that are common to your industry and choose an insurance package that best fits your needs. Types of Insurance and How They Protect Your Business As each industry faces its own unique set of challenges, every business requires a different kind of liability insurance to cover its risk. The following are the most common purchased types of liability insurance:
General Liability Insurance
This type of insurance is designed to safeguard a company’s financial assets when the company has acted in a manner that has caused injury or property damage.
Commercial Property Loss Insurance
This type of insurance protects your building and assets that belong to your business. You can select from two separate categories of commercial property insurance. The first kind is a comprehensive package that safeguards you from property damage due to vandalism, fire, flood, and other natural disasters. The second kind is specific to individual disasters, but is more affordable as a result.
Loss of Income Insurance
Often times a disaster, equipment failure, or workplace injury can prevent you from earning the capital that is vital to keeping your business healthy. Loss of income insurance does what the name implies; it helps your business stay afloat by providing income to cover any losses you incur while your business operations are suspended.
Errors and Omissions (E&O) Insurance
Errors and Omissions Insurance is usually sought by professionals in the business of consulting or providing advise to others. Given that advice may sometimes fail, be incorrect or result in financial loss for the client, there are no shortage of lawsuits for professionals in this arena. As a result, in many areas it is considered compulsory for lawyers, financial advisers, doctors and accountants to obtain some form of liability protection. Errors and Omissions insurance is specially designed to handle such claims and malpractice suits.
For those in the business of creating or selling products, there is always the risk that a product could be defective. In this instance, product liability insurance will protect you from a lawsuit resulting from someone being injured or incurring property damage as a result of using your product.
Business Owner’s Policy
Some business require a variety of different insurance packages bundled together. For these companies, there are special insurance offerings called business owner policies. These provide attractive costs while helping you stay organized by dealing with a single company. However, it is important to ensure that the company offering the bundle is capable of handling a variety of insurance types, and has the experience to prove it. Exclusions and Conditions Having a strong liability insurance policy is an important part of shielding your business from a potentially disastrous event. However, it’s important when choosing an insurance policy to be aware of the limitations and personal responsibility that come with your daily operations. For example, purchasing a product liability policy does not mean you can avoid doing rigorous quality assurance and safety checks on your products. After all, product liability insurance typically does not cover any known defects or products that were intentionally made poorly in order to cut costs. There are many such exclusions and conditions in all insurance offerings and it is important to make the distinction between what is covered and what is not. Ultimately, businesses purchase insurance in hopes you’ll never need it, and to calm the fear of knowing you someday might.
Author Bio: Mikes Sanders writes on behalf of PublicLiabilityInsurance.org (Click here to visit the site). Mike writes on a wide range of business finance and insurance topics.