Business Insurance Types

Several basic business insurance types are required by most small or large commercial enterprises. While not every type is required by law in all states, most businesses rely on these forms of coverage to protect their financial interests. Worker's compensation, property insurance, commercial auto insurance and liability protection are the most important business insurance types for your company to carry. In addition, you can choose from a selection of speciality policies from our business insurance guides, such as key employees or business interruption coverage.

Many companies choose to combine several of the basic business insurance types in a general policy called a Businessowners Policy, or BOP. A BOP can reduce the overall cost of insurance, and many smaller businesses choose this strategy. You can also tailor a policy to your needs by working with a commercial insurer to choose only the types of protection your company requires.

Workers Compensation

Worker's compensation is one of the business insurance types that is required by law in most states. Each state establishes its own regulations and requirements regarding worker's compensation, which compensates employees for the costs of illness or injury incurred on the job. Unlike other business insurance types, worker's compensation must generally be purchased as a standalone product and cannot be combined with other types of coverage in a BOP.

A worker's compensation policy can pay for an employee's medical bills and lost wages if he or she is hurt during the course of work related activity. From the standpoint of a business, worker's comp protects the company against expensive lawsuits while protecting the employees' well being. If an employee is fatally injured in a work related accident, this type of coverage will also pay a benefit to the employee's survivors. As you evaluate the business insurance types that your company needs, worker's compensation is almost always mandatory.

Commercial Vehicle and Property Policies

Business vehicle insurance, like personal car insurance, is required by law if your company operates a car, truck, van, motorbike or other vehicle in the course of its business. With a commercial auto policy, the business should be listed as the principal insured. A commercial auto policy protects your company's financial interests if one of your employees is responsible for an accident in which other drivers are hurt or property is damaged. With comprehensive and collision protection, repair or replacement of the vehicle is also covered.

Property coverage is one of the types of protection that is not required by law; however, most companies would not go without this form of financial security. A property policy insures the building you own, the equipment you use in the operation of your business and the furniture and office supplies you keep in your building. In addition, property protection may apply to the electronic files created by your firm. Damages such as fire, explosions, interior flooding from broken pipes, falling branches, wind, ice and computer viruses are covered under most policies.

Property protection excludes certain types of property, such as vehicles and water craft. Motorized vehicles and boats must be insured under specialty policies. Money, securities, land, landscaping features and external structures like fences or garages must be covered under specialty business insurance types, as well.

Liability Insurance

Liability protection is one of the most important business insurance types, even though it is not required by law. Liability policies cover your company's financial assets if you are sued by a member of the public for bodily injury, personal injury, property damage or harm to another party's professional reputation. If one of your customers is hurt while tripping over a broken slate in your sidewalk, or if a competitor sues you for posting defamatory information about him, legal expenses and damages to the defendant would be covered.

Professional liability is a specialty type of coverage required by engineers, lawyers, architects, medical practitioners and other highly trained experts with an advanced level of knowledge in their field. If one of your clients or patients sues you for negligence or for failing to perform to the degree expected of your profession, you will be covered against the costs of legal action and damages. No matter which of the types of liability protection you choose, it's important to make sure you are adequately insured to cover yourself against potentially devastating lawsuits.

Keeping your property in good repair and training your employees in safety procedures can reduce your liabilities significantly. Many lawsuits can be prevented by simple precautions like replacing broken light bulbs, mopping up spills immediately or keeping sidewalks and porches free from ice. As you review the different business insurance types with your provider, ask about risk management measures that might reduce the cost of your premiums. The more measures you take to protect your company and your employees, the cheaper your coverage will be.