Business Insurance Types

Make sure your business is covered by the right kind of insurance policy.business image by Jaroslav Machacek from Fotolia.com

Depending on the type and size of your business, having insurance is a necessity and is sometimes mandated by law to protect the business and the consumer. There are several insurance types available to businesses, and knowing what kind of benefits each type provides will help you be sure that you are covered in the event that something unforeseeable happens.

General Liability

General liability insurance is a common form of insurance purchased by all sort of businesses. This insurance covers the costs of any legal ramifications of lawsuits filed against the business, according to Business.gov. When an accident happens on company property that involves an injury, or if someone claims that the business is guilty of negligence in some way, the general liability insurance will cover the cost of judgments against the company up to the amount of coverage listed in the policy. The insurance will cover any treatment for injury, property damage, attorney's fees and other costs associated with the incident.

Product liability is a type of insurance that is needed to varying degrees by different businesses based on the products they produce or sell. Product liability insurance covers financial losses that are a result of defective products that cause injury or bodily harm to consumers. Businesses that manufacture or sell items that have a higher risk of causing injury should carry this type of insurance, while those offering products such as tee shirts may not feel that this type of insurance is necessary.

Most states require a business to carry worker's compensation insurance. When an employee is injured on the job or becomes ill because of exposure to something within the working environment, the business can be held liable for medical expenses and lost wages. The presence of worker's compensation insurance will take care of these financial obligations for the company in exchange for premiums paid to the insurance company.

When an incident leads to damage of company property or lost income due to business interruption, an all-risk commercial insurance policy can be invaluable to a business owner. All-risk policies cover a wide range of events that can cost the company financially. These events may include fires, flooding, smoke damage, hail, vandalism, break-ins and more. All-risk policies cover all events leading to such damage or loss of business unless they are specifically excluded in the language of the policy, according to Business.gov. These policies will pay the policyholder a specific amount depending on the range of damage or loss to cover the expense of the incident.