Running a business comes with risks. One method of mitigating those risks is to purchase insurance. If you own or are thinking of owning a business, you should consider these four types of business insurance.
1. Captive Insurance
Captive insurance is a form of self-insurance in which a company or group of companies form a licensed insurance company to insure itself. This method of insurance may provide cost savings and price stability, as well as a means to insure non-traditional or complex risks that may be difficult to insure on the commercial insurance market. Captive insurance companies can be set up in a variety of ways, including group captive insurance, in which multiple companies are responsible for the captive, rather than a single self-insurer.
2. Property Insurance
Almost every business needs some form of commercial property insurance. Even if you are leasing or renting the space you operate out of, your business likely still has equipment, supplies and other assets that need to be insured. Property insurance generally protects against causes of loss such as fire, lightning, wind and water; however, some causes of loss, such as floods or earthquakes may be excluded. Additionally, some hurricane-prone locations may have separate wind pools to cover wind damage from hurricanes.
3. Worker’s Compensation Insurance
Worker’s compensation insurance covers medical treatment, disability and death payments for employees who are injured or killed during their employment. Even businesses that do not engage in high-risk activities, such as offices, should have worker’s compensation coverage, because employees may still be injured in slip-in-fall accidents or suffer repetitive motion injuries, such as carpal tunnel syndrome. Worker’s compensation claims are generally settled on a “no-fault” basis, which means that if your employee is injured while performing their work, you will likely be liable for their injury, whether or not you did anything negligent to cause it or even if their own negligence resulted in the injury.
4. Product Liability Insurance
If your business manufactures products, then you need product liability insurance. This insurance protects you if someone suffers an injury, death or financial loss due to a defect in your product. Even if you believe your products are very safe, it is a good idea to have this coverage, because the cost of litigation alone can be substantial.
There are many types of insurance coverage you should consider when you own a business. These four are some of the most common.