Depending on the type of business you own, whether you have a brick-and-mortar location, and whether you hire employees, you may need some of a variety of types of insurance. Insurance is one way to manage the many risks that come with owning a business. Read on to learn more about types of insurance coverage and which you'll need for your business.
Types of insurance coverage
Business insurance policies can cover a variety of scenarios, depending on your business type and what activities you'll be engaged in. This page, adapted from the Minnesota Department of Employment and Economic Development (DEED), gives an overview.
Protects the owner of the property (or the lenders holding a mortgage) against loss caused by the actual destruction of a part or all of the property by fire, windstorm, explosion, falling aircraft, riot and other perils.
Business interruption insurance (and other time element coverage)
Protects against loss of earnings when you can’t do business because of damage or destruction of the physical property. Business interruption insurance pays close to what you normally would have earned. The premiums, especially when part of a complete insurance package, are low. There is also similar insurance which provides coverage if you are hospitalized and have to shut down business.
Liability insurance (including business automobile)
Protects against loss arising out of legal liability for death, injury or damage to the person or property of others caused by negligence. Included are obligations to pay medical, hospital, surgical and disability benefit to injured persons, and funeral and death benefits to dependents, beneficiaries or personal representatives of persons who are killed, irrespective of legal liability.
Fidelity bonds guarantee against loss due to the dishonesty of employees. Surety bonds guarantee the performance of various types of obligations assumed by contract or imposed by law. Surety bonds are most often used in the construction industry and are often required on public construction projects.
Workers’ compensation insurance
Provides for payment of compensation benefits, as established by state law, to injured employees of a business.
Group insurance for employees
Group life insurance and group health insurance provided as employee benefits must conform to standards established by state and federal statute.
Coverage for any product manufactured by the insured. Coverage applies to the product once it leaves the manufacturer’s hands and covers the manufacturer in case the ultimate user of the product sues for bodily injury or property damage.
E-insurance for companies with an online presence
Businesses that operate on the Internet face the possibility that their activities may subject them to liability in other jurisdictions. Since the Internet transcends geographical boundaries, one may be subject to a lawsuit in another state or even another country. In addition, companies with operations on the Internet are in the business of information publishing, vulnerable to liabilities that typically plague media companies such as defamation, invasion of privacy and intellectual property infringement claims. Insurance companies are beginning to offer policies specific to online businesses; your insurance agent can give you more details about this type of coverage.