Depending on your industry, you may need multiple types of business insurance. At a minimum, you’ll likely need general liability and commercial auto coverage. You might also need workers’ compensation and a commercial lease, among other specialized coverages.
The best business insurance providers offer a wide range of policy options. The most common include a business owner’s policy that bundles property, general liability and business interruption coverage in one package.
Business Owner’s Policy (BOP)
A BOP bundles property and liability insurance into one policy for small businesses. This package is typically designed for office-based companies like law firms and real estate agencies, smaller restaurants, or retail stores.
Liability protection covers third-party bodily injury or damage to property that occur in the course of business operations. It also includes legal fees and expenses related to lawsuits filed against the company. The property coverage component of a BOP usually includes commercial property and business interruption insurance. This policy provides coverage for items owned by the business or its customers that are stored on the premises, as well as equipment in transit and rented space.
Depending on the insurer, additional policies or endorsements can be added to a BOP. However, it is important to note that a commercial auto policy and workers’ compensation insurance are generally not included in this type of coverage. The specific risks involved in each of these types of coverages may be better addressed by separate policies or coverages.
Commercial Auto Insurance
Commercial auto insurance provides liability and physical damage coverage for vehicles that your business owns, leases or rents. It’s a must for small-business owners who use cars, trucks or vans to transport goods, meet clients, run errands and more. This type of business car insurance is separate from rideshare or personal vehicle insurance and may also need hired and non-owned auto (HNOA) coverage.
If you or one of your employees is behind the wheel of a company car and causes an accident, commercial auto insurance will typically pay for damages up to your policy’s limit. It will also cover medical payments and legal expenses for those injured in the crash.
A commercial auto policy can include collision and comprehensive coverage to protect against damage caused by accidents, weather events and theft. It can also include medical payments and legal expenses for occupants of your business vehicles as well as coverage for damage to third-party vehicles and property when you’re at fault.
General Liability Insurance
While it’s impossible to anticipate every risk, many business owners find that having a general liability policy can help. It protects a business from claims that it caused bodily injury or property damage to third parties during the course of normal operations. For example, a customer might trip and fall over equipment in your store or a company might file a copyright infringement claim over wording used in a promotional video.
These kinds of incidents can cost a small business a lot in terms of monetary compensation, legal costs and lost revenue. A standard general liability policy can pay for these expenses, up to a certain limit per incident.
It’s often purchased as a standalone policy or bundled into a Business Owner’s Policy. Insurance agents can help you determine what coverage is right for your business and help you select a limit that makes sense for the risks you face. However, it’s important to note that a general liability policy doesn’t typically cover claims related to the quality of work or professional negligence.
Business Interruption Insurance
Business Interruption insurance pays to replace lost income and ongoing expenses that you could have earned if your business hadn’t been shut down. This coverage is typically included in commercial property policies.
A few critical elements must be present in order for business interruption coverage to kick in. First, there must be direct physical damage to your business’s property. Second, you must show that the physical damage caused a “necessary suspension” of your business operations.
Your insurance agent can help you decide which option to select for your policy, depending on your specific needs. For example, extra expense coverage reimburses out-of-the-ordinary operating expenses that you might incur while attempting to minimize or avoid shutdown during a disaster such as: rental of equipment to operate in a temporary location, hiring non-exempt employees to cover overtime costs, loan payments on your original property, advertising to communicate your new location to customers, and more. This type of coverage may be included in your policy or offered as an endorsement. assurance entreprise