What Does My Business Insurance Cover?

If you are a business owner, it's very important that you understand exactly what is, and is not, covered in your business insurance policy. Shopping for business insurance is not an easy thing to do, yet purchasing insurance coverage is one of the most important decisions every business owner has to make. Having a solid and comprehensive business insurance policy is absolutely essential if you want to make sure that an unforeseen circumstance doesn't have a negative impact on your company's ability to continue operating for the long term.

Every business owner should review his or her business insurance policies at least once a year, to make sure that the type of coverage he or she has purchased is sufficient for the current state of the business. As your business changes and evolves over time, it's likely that the type of coverage you need to protect your interests will also change. Many people who think their companies are adequately insured are shocked to find out that the newest aspects of their operations aren't included in their existing policies at review time, or worse yet, when it is time to actually file a claim.

Property Coverage

Most small business owners realize that they need property coverage. This is the type of insurance that protects the assets of the business against theft, fire damage, or losses that occur as a result of other unexpected disasters or circumstances. If you own the facility in which your business operates, your property coverage should include the building itself and everything inside it. If you lease, your landlord will carry coverage on the physical structure, but not on any of the items your company stores inside it.

When you purchase a property coverage policy, it's important to pay attention to whether your policy includes replacement value or depreciated value coverage. If you want to make sure you get enough money to go out and purchase new products to replace what you have lost, replacement value is a must.

Liability Coverage

Unfortunately, many business owners overlook the importance of liability insurance. This type of coverage protects business owners in the event that customers or employees experience harm due to any action or decision of the business. For example, if a customer is injured because your company sells him or her a defective product, you may face a liability claim or lawsuit. If an employee is injured operating equipment that the company owns or leases in the course of performing his or her job duties, a liability claim may follow.

Workers' Compensation Coverage

Most businesses are legally required to carry workers' compensation coverage. This type of insurance provides coverage for employees who are injured on the job. Small business owners need to understand that the law dictates that employers are responsible for paying for work-related employee injuries, regardless of fault. Whether the employer or the employee is at fault for an injury that takes place in the workplace or is otherwise related to the job, the company's workers' compensation coverage will kick in to cover the associated costs, such as medical bills, time lost form work, and other expenses.

Business Interruption Policy

Many small business owners, particularly in the startup phase, struggle to keep their revenue flow one step ahead of their expenses. In the event of a disaster, such as a building fire, hurricane, blizzard, etc., the resulting loss of productivity and income can be devastating. However, if your business insurance plan includes a business interruption policy, you don't have to worry about such events. These types of policies bridge the revenue gap based on shutdowns that occur as a result of covered events, based on historical business performance figures. In the aftermath of a natural disaster, this type of coverage can mean the difference between survival and financial devastation for a small business.