Businesses are built around risks. In most cases, the risk level of your business equals your reward level. However, when these risks become a reality, you may be facing major losses that could even cripple your business. That is where business insurance steps in.
Insurance is an approach to risk management that provides a hedge against the realization of these risks. The hedge will help you replace the losses which your business or its assets incur.
7 Business Insurance Policies You Need For A Modern-day Business
1. Property Insurance
Your business needs property insurance to cover their premises. This policy is necessary whether you own or lease the property. Property insurance will cover your business’ inventory, equipment, furniture, and signage against theft, fires or destruction by storms. However, most property insurance policies fail to cover your property against major calamities that cause mass destruction like earthquakes and floods. It is possible to negotiate these risks into your insurance policy.
2. Home Business Insurance
Are you operating a stay at home business? Many business owners are operating small businesses out of their homes. However, home business coverage is slightly different from corporate insurance coverage. Some of your inventory and assets may be left out of the insurance policies. However, you can negotiate with your insurance company to negotiate an appropriate policy for your business.
3. Vehicles insurance
Does your business own any vehicle assets? Vehicle insurance is necessary to protect your vehicle against accidents, theft or damage. It is vital that you cover third parties as well so as to protect yourself from lawsuits and extra costs from damage your vehicle causes on third parties. Your personal insurance should cover you and your vehicle if you use your personal vehicle for business operations.
4. Product liability Insurance
Do you manufacture and sell products? Your product may cause damage despite all the safety tests and approvals. In the event of any damage, your business will be prone to lawsuits. Lawsuits can ruin your business’ image/reputation. Moreover, sales may go down in the event of a lawsuit which minimizes the profits. Furthermore, your business will have to invest in a lawyer and other expenses that will help in its defense in court.
5. Business interruption
Business interruption insurance covers operational risks. Catastrophic events and disasters may occur and prevent the normal operations of the business from taking place. For example, in the case of an earthquake, employees may not be able to turn up for work, manufacturing may stop and no sales will take place.
You will incur losses in such a period. It helps to have business interruption insurance which compensates you for the losses you incurred during this period. Businesses or companies that have physical premises require this insurance policy. A good example is a retail business.
6. Workers compensation insurance
Do you have any employees in your business? You should get this policy immediately you get your first employee. This policy protects you and your business against employee risks associated with the business. For example, the risk of accident, injury or even death as a result of the place of work.
You should not assume that they are completely safe when they are working in a low-risk environment. Small accidents like a slip and fall or employees who develop carpal tunnel syndrome can file claims and sue your business.
7. Errors and Omissions insurance (E&O)
Errors and Omissions insurance is also known as professional liability insurance. This insurance protects your business against negligence complaints that arise when harm is caused by a product or service’s failure to perform or mistakes. The terms of such policies will vary with your industry. For example, the concerns in the transport services industry will be different from the ones in the construction industry. Industries and works with high risks are best suited for this type of insurance.
Types Of Modern Business Risks
Perception of risks in business has expanded over time. Originally, businesses only considered financial, operational, logistical and Legal risks.
Modern businesses face a broader scope of risks. However, the traditional risks in businesses still exist. some of the modern risks businesses currently face include:
- Social and Reputational Risks
- Cultural Risks
- Environmental Risks
- Information risks
- Technological risks
- Loss of Intellectual property
- Traditional Risks include financial risks, legal, logistical risks, and operational risks.