What is Business Insurance?
Business insurance is a type of insurance that is purchased by enterprises and organizations of any size to protect against losses resulting from typical events that can occur during the day-to-day operations. There are so many different types of business insurance, including coverage for legal liability, property damage and risks related to employees. Each organization will need different levels of insurance based upon its potential risks, and every industry faces a different level of risk.
Business insurance, or commercial insurance, is a broad term that refers to a grouping of different commercial insurance coverages. These coverages are intended for businesses, not individuals, but sole proprietors can also benefit from business insurance.
Businesses may seek insurance coverage to protect their physical premise from damages, or to protect themselves from the financial repercussions of a lawsuit. That’s just the tip of the iceberg. Let’s go over the different types of business insurance that business owners may want to consider.
General Liability Insurance
General liability insurance, or commercial liability, is one of the most basic types of liability insurance for any business — large or small. Every business is exposed to the risk that a third-party could file a claim against them, alleging bodily injury or property damage because of your business activities or injuries that were suffered on business property.
Lawsuits can be expensive. Businesses purchase general liability insurance to protect themselves from expenses resulting from a third-party liability claim, such as medical expenses, legal costs, settlements and more.
How Much General Liability Insurance do I Need?
The amount of general liability insurance you require depends on several things, like the size of your business and its type, the kind of customers you would ordinarily serve, the number of employees and more. Most businesses, even smaller businesses, opt for at least $1 million in coverage – if not $2 million. What this amount means is that your insurer will pay out this amount for claims made during the term of your policy, which in most cases is a year. This is true regardless of how many claims you make.
Professional Liability Insurance
Like commercial liability insurance, professional liability insurance (or errors and omissions, as it’s also referred to as) serves a kind of liability insurance that covers medical bills, legal expenses, settlements and more – but for a different nature of claim. This coverage helps to protect businesses that offer professional services or advice — such as contactors, consultants, analysts and more. A loss due to an error or misinformation could be very costly for a client, who then might sue.
Professional liability insurance protects businesses against costs if they are sued for negligence, errors, omissions, misrepresentation and more.
Who Needs Professional Liability Insurance?
Not every business needs professional liability insurance, but some businesses may even be required to carry it in order to comply with industry regulations. Here is a list of some occupations that could require professional liability insurance:
- Advertising agencies
- Insurance professionals
- Real estate agents
- IT professionals
With some industries, you are more likely to have professional liability insurance referred to instead as errors and omissions insurance. With healthcare professions, it’s more frequently referred to as medical malpractice and, with lawyers and law professionals, it’s often referred to as professional indemnity insurance. There are small variations in what it covers between industries, but ultimately, it’s all the same.