What Is General Liability Insurance
Commercial general liability insurance covers lawsuits related to bodily injury or property damage occurring on your premises. It can also cover cases that relate to libel or slander.
Suppose you operate a retail store. It’s the dead of winter, and you forget to salt the walkway leading to your storefront. If a client approaches your store, slips, and bumps their head, they might sue you for medical costs, pain and suffering, and any lost wages resulting from the injury.
General liability protects you from this lawsuit. Similar to professional liability insurance, it pays for legal fees, damage awards, and out-of-court settlements up to your policy limit.
A policy can further cover situations such as:
- You’re a plumber fixing a toilet and you accidentally damage the client’s marble tiles
- A client trips over a cord at your accounting office and breaks their laptop and,
- You’re a carpenter â you leave your toolbox out, and a third-party stubs their toe.
What Is Business Insurance
Business insurance is a form of risk management used to protect you and your company from financial loss in the event of an accident or crisis. According to Rorie Devine, CTO at Gro.Team, its vital for businesses to apply for insurance because it will help cover the costs associated with property damage and liability claims.
If you are without business insurance, as an owner, you could run the very real risk of having to pay out of pocket for costly damages and legal claims against your company, Devine told Business News Daily. Depending on the cost, this could effectively shut down your business without insurance, meaning that, although you may not need to claim on insurance often, just one use could see the insurance cost paying for itself straightaway.
Key takeaway: Business insurance helps protect you from financial loss in the event of an accident like property damage or a liability claim.
Does My Small Business Need Insurance
Small business insurance is not mandatory for you to operate your business however, it can protect you from many of the common risks you may encounter in your business operations. As an integral part of your risk management strategy, small business insurance covers costs associated with claims or lawsuits that may otherwise threaten your businesss survival.
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What Types Of Insurance Should A Small Business Consider
To protect your business you must accurately assess the risks you face and choose insurance accordingly. To protect against losses that may occur to your business, insurance policies are available that cover equipment, real property and buildings, inventories, and other business assets. If you run your business out of your home, don’t assume that your homeowner’s policy covers your business property or any liabilities you incur in the course of running your business.
Securing the right types of insurance as well as the right amounts can make the difference between a successful business and one that is crippled due to non-insured or under-insured losses. That being said, insurance can be quite costly so to avoid spending money on coverage you don’t need, consider carefully the various types of insurance customarily available to small businesses, before you talk to your insurance agent:
- business owner’s insurance
- other insurance
Types Of Business Insurance Recommended By Industry
Businesses across industries share similar risks and thats why its good to educate yourself on the particulars of insurance for your profession. You can review some industries from the list below to learn more about the potential exposures and insurance recommendations for what you do:
Accounting Accountants take care of their clients most sensitive matters their finances. No matter how careful and experienced you are, mistakes can and will happen. An inadvertent error or a missed tax deadline can lead to massive losses for clients and possible expensive lawsuits for you. Additionally, accounting software and technology have become an indispensable part of accounting, which means that data breaches and cybercrime can lead to serious exposures as well.
Construction Construction has always been considered an extremely high-risk industry. No matter how experienced and cautious you and your team are, unpredictable accidents are always a possibility on a construction site. The right insurance program will protect you from losses and cover any potential lawsuits if a third party is injured on your site or as a result of your work.
Dont see your industry? No need to worry, we help many businesses get the right types of business insurance at a lower cost, and with less hassle. You can reach out to our team of expert brokers, or if you prefer to get started on intelligent quotes, create your Embroker account today.
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What Isnt Covered By These Insurance Policies
Some risks are excluded from normal insurance policies and may require a custom insurance program. For instance, certain natural disasters such as earthquakes or floods are typically excluded because they cause massive damage to a relatively small geographical area and it just isnt financially viable for insurers to offer standard coverage for these types of events. Infectious diseases are also excluded, as their impact is unpredictable and can potentially impact the entire country.
If you wish to be protected from these dangers, youll have to talk to your insurance broker so that they can advise you on getting specialized coverage. A few risks cannot be insured at all. Most types of business insurance cannot insure commercial property against damage caused by war, radioactive fallouts, or government seizures, for example.
General Liability Is Recommended For All Small Businesses
A small business is a privately owned corporation, partnership or sole proprietorship that ranges in the number of people it employs. It differs from a startup, in that it is offering a product or service that is already known to the marketplace and meeting an already existing demand.
Every small business needs general liability insurance. This liability policy provides protection against common customer or client incidents, including bodily injuries, property damage, and personal injuries. An accident involving a customer can result in huge legal fees and medical expenses, making this an important policy for any business.
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Data Breach Expense Insurance
Sometimes referred to as privacy breach expense insurance, this type of coverage protects your business if your customer information is compromised or exposed.
With this insurance in place, youll be protected in the event of a lawsuit related to a breach. For example, it provides coverage of certain:
- Remediation expenses
- Defence expenses
Privacy breach expense is an optional kind of coverage, with limits up to $100,000, offered in our Small Business Insurance package.
Have The Right Types Of Commercial Insurance In Place
It is vital to your company to have the right types of commercial insurance in place. Liability coverage wont cover you if a worker gets hurt.
Workmans comp wont cover damage or income losses if your business gets broken into.
Commercial auto wont cover your business if you have a fire and lose half of your inventory.
See where we are going with this?
So who do you ask, to find the right types of business insurance for you and get quotes? You ask Hiscox!
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Business Use Insurance Exclusions And Insuring Vehicles
The business use exclusion to homeowner’s insurance coverage must be addressed by business owners running a business out of the home. Dealing with this exclusion is vital. You don’t want to ignore it, hoping that it won’t apply to your home business situation. It will â and possibly in ways that are even worse than you imagined!
Unless you have taken steps to have your home business covered, your homeowner’s policy will exclude it from coverage. The result? The insurance company will not reimburse you for liabilities that arise from the home business, or pay claims on damaged or destroyed business property. Such uninsured losses may be devastating:
A large tree is uprooted during a storm and crashes onto the roof of your home. The roof repair costs $20,000 and water damage to a couple of your personal computers inside the house that you use in your business requires that they be replaced at a cost of $2,500 per computer, for a total cost of $5,000. When a computer technician comes into your business area of your home to set up the two new replacement computers, she trips and falls, breaking her collarbone .
What if you rent? Renter’s insurance offers liability and property coverage for renters that is similar to that available under homeowner’s policies. Renter’s insurance policies are subject to the same exclusions that apply to homeowner’s policies, most particularly the business use exclusion.
Frequently Asked Questions About Small Business Insurance
Starting a small business is equal parts exciting and overwhelming. While some business areas you cant wait to get started on, like branding or product development, other aspects of business dont quite hold your attention. Insurance may be one of them, and we wouldnt be surprised if it neared the bottom of your list things to do. Insurance is as integral to your businesss success as a product that sells, and taking the time to insure your business correctly may save hundreds of thousands down the line.
We know it may be difficult for those unfamiliar with the industry to understand what insurance you need , so weve collected the top five questions we receive to help you jump-start insuring your business.
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Commercial Insurance Policy Types
Bummer.Um, Doctor? What are you doing back there?
- Small Business Health Insurance Whether your company has 1 or 100 employees, health insurance coverage is a factor. This coverage can be an individual policy that covers just yourself or a group plan for multiple employees. The number, and type, of eligible employees, will determine the coverage that should be purchased. For example, a one-person operation will not be eligible for group coverage purchased through the company. Because there is no group to cover, they would need to purchase an individual plan. However, a company that employs multiple people may consider offering a group health plan as an employee benefit that is much appreciated and much sought after.
Types Of Insurance Policies
Nonprofit organizations are often viewed the same as for profit organizations when it comes to insurance products. There are four common commercial insurance policies that may be of interest to a nonprofit organization. There are many other types of commercial policies available. Please contact a broker or agent for more information.
- Commercial General Liability
- Directors and Officers
- Commercial Property Insurance
- Special Event Liability
While there have been few lawsuits brought against nonprofits in Canada, it has happened. Nonprofits have been sued by government, donors, members, clients, employees, uninvited guests and even directors suing other directors. While not all these lawsuits result in payment, they all have defense expenses which can be very costly.
For more information on insurance policies and examples of claims faced by the voluntary nonprofit sector please visit Imagine Canada, Insurance and Liability Resource centre for Nonprofits.
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How Much Does Commercial Property Insurance Cost
The amount youre likely to pay for commercial property insurance depends on the value of your business assets.
Other factors considered include:
- Location of your business and the likelihood of disasters
- Nature of your business design
- Purpose for the property
- Fire and theft protection measures in place
Commercial property insurance covers everything inside and outside your property, including computers, furniture, equipment, inventory, exterior signage, and essential documents.
What Is Commercial Insurance
Commercial insurance is a catch-all name for policies that are created for professionals and businesses. For example, you may have heard of commercial property insurance, which building owners or property management companies will purchase in order to protect their buildings.
Of course, if youre an entrepreneur or small business owner, youre probably looking for something more like commercial general liability insurance or professional liability insurance. See the below section for more information on these kinds of policies.
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Potential Risks Small Businesses Face
Obviously, every business is different and not all businesses face the same risks. Even those that do face similar risks, might face them to a different degree depending on each businesss specific characteristics.
Lets take a look at some of the most common small business risks that just about every business faces in some way or another.
Do You Need A Commercial Policy For Your Business Insurance
A business owner’s policy is often the most economical way to protect against a broad range of risks that may befall your business. This type of policy is available for many specified types of lower-risk small businesses .
However if your business does not qualify for a business owner’s policy, such as if you operate a restaurant or manufacturing business, you’ll need what is known as a commercial policy.
Commercial insurance policies
A commercial policy is usually more expensive than a business owner’s policy, but is more flexible. It’s also more difficult to understand, since unlike a business owner’s policy, a commercial policy is written to protect against certain basic risks, with protection against other risks to be accomplished through the purchase of additional coverage, based the specific needs of your business.
Because obtaining adequate coverage under a commercial policy depends on identifying, and specifically insuring against all risks beyond those covered in the core policy, your selection of an insurance agent or broker becomes more important if your business needs a commercial policy. In this case, it is vital that your agent or broker is familiar with the operation of your business, as well as knowledgeable about the commercial policies that he or she offers.
If you have a home-based business, you’ll be especially concerned about shielding your residence from possible casualties or liabilities.
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What Does Small Business Insurance Cover
Heres a closer look at top coverage types for small businesses.
General liability insurance pays for legal costs such as hiring an attorney and any judgments against you and your business. General liability insurance includes coverage for damage to reputation such as slander or libel and copyright infringement.
Liability insurance pays others, not your own business. Its also known as business liability insurance.
Commercial property insurance covers a number of business items including computers and workstations, desks and chairs, business records, business inventory and supplies. Commercial property insurance can also cover a businesss office and business building.
Commercial property insurance is also called business property insurance.
Workers compensation insurance offers several benefits to employees who are sick or injured because of their jobs. This includes medical care, physical therapy and compensation for lost wages. Death benefits for an employees family are available if an employee passes away from a work-related illness or injury.
Businesses buy workers comp insurance for employees and this insurance is required in most states.
Term Vs Permanent Life Insurance: Which Should You Choose
Term life insurance and permanent life insurance are the two main types of life insurance. Permanent life insurance includes products like whole life insurance and universal life insurance. Heres a look at the main differences of term life vs. permanent life insurance.
|Term life insurance
|Permanent life insurance
|Provides level premiums for a set period of time, typically 10 to 30 years, with the option to renew after the initial term ends, but at a higher price
|Can provide coverage for your entire life, so long as you pay your premiums
|Does not build cash value
|Can build cash value that you can access through a policy loan or withdrawal for business needs
|Acts as a liability on your balance sheet
|Acts as an asset on your balance sheet because it builds cash value
|Less expensive than permanent life insurance
|More expensive than term life insurance
Whether you should choose term or permanent life insurance depends on your situation. For instance:
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The 9 Types Of Small Business Insurance Coverage You Need
As with health insurance or car insurance, small business insurance is hopefully something you never have to use. But when something unexpected happens, having business insurance can be the difference between your businessâs continued success or failure.
Unfortunately, a lot of businesses arenât covered. According to Next Insurance, 44% of small business owners have never purchased business insurance, even after operating for at least one year. By purchasing the right types of business insurance, you can protect your companyâs assets against damage and legal claims.
Many small business owners give up on purchasing business insurance because of how confusing the process can be. Every business will need a slightly different insurance package depending on the size of the company, the location, and the industryâand the choices can be overwhelming, especially if youve just started your business.
In this guide, therefore, weâll break down the different types of business insurance, how much they cost, and the purchasing process to find the best small business insurance coverage for you.
Give Yourself Greater Peace Of Mind
The hunt for commercial insurance is an anxious journey, but it gives you peace of mind in the long run by managing your companys risk. Nowhere is the adage better safe than sorry more applicable than in the world of commercial insurance, so take the time to research the best options for protecting your small business.
We’d like to thank Zensurance rated the most innovative company of 2016 by Canadian Innovation Exchange for this most excellent post on the basics of small business insurance and for helping to take the pain and paperwork out of the insurance process.
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