The DMV makes you buy insurance for your car, and your mortgage company makes you buy insurance for your house, but many businesses don’t have anyone making them buy insurance. So how do you know if you need insurance for your business and what kind to get? Here’s a guide to help you get started.
Where Not to Look: Personal Insurance Policies
You should expect to get no coverage for your business activities from your personal insurance policies. That includes your homeowners’ insurance, personal car insurance, and personal umbrella insurance. Every type of insurance has a specific purpose, and business activities rarely fall under one of the covered purposes of personal insurance policies.
Start with a Business Owner’s Policy
A business owner’s policy is a package deal of insurance for businesses. What’s included will vary by the insurance company, but it will often include a mix of liability protection, property protection, and business interruption coverage. Many insurance companies have a package for common types of small businesses. If you’re a plumber and buy a plumber’s business owner’s policy, you’re probably in pretty good shape. Still, your specific business may have additional insurance needs, or you may not fall under a common insurance package, so it’s important to know about the individual coverages as well.
Commercial General Liability
Commercial general liability gives general protection against personal injury and property damage claims. If you cause someone to slip and fall or break a window, this is the type of insurance that will usually step in.
Professional Liability Insurance
Professional liability insurance covers errors and omissions in your specific trade. For example, this might be a lawyer giving bad advice or an architect making a mistake when designing a house. The main difference between this and general liability is that professional liability applies to more specialized actions, while general liability is geared towards things that could happen in most types of businesses.
Exactly what’s covered will depend on your policy. Read your commercial general liability policy for exclusions, because those exclusions will tell you if you also need professional liability insurance for your type of business.
Commercial Auto Insurance
Accidents in a work car or truck fall under commercial auto insurance instead of commercial general liability. Auto coverage is a specialized type of coverage that virtually all insurance companies separate from other coverages. It works similarly to personal auto insurance with separate limits for property damage and bodily injuries.
Business interruption insurance covers your lost income when your business can’t operate due to a fire, theft of important equipment, or other mishaps. This may be by reimbursing you for sales you couldn’t complete or covering extra expenses you incurred to keep things running. What’s covered and how will vary by policy, so be sure to carefully read the details.
When you damage someone else’s property, you’re covered by liability insurance, but liability coverage doesn’t cover your own property. You need separate property coverage for theft, fire, or other losses. When considering this coverage, also look at whether all of your equipment is covered and whether certain items may have lower individual limits (similarly to how homeowners’ insurance may not cover the full value of your jewelry).
Ask Your Insurance Agent
The best way to find out what insurance you need is to ask your insurance agent. We help businesses get the right coverage all day every day. Contact Pagel & Associates Insurance Agency for more information or to request a quote.