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Business Insurance

Purchasing insurance isn’t something that most entrepreneurs think about when planning and starting a small business. It’s not until an unforeseen disaster occurs when they acknowledge its importance. While some small businesses can endure disasters, others will be forced to close their doors. Rather than taking this risk, entrepreneurs should safeguard their small business by acquiring the right business insurance.

What Is Business Insurance?

Business insurance is form of financial protection that compensates businesses for financial loss caused by various events. If an entrepreneur’s small business suffers a disaster that’s covered by his or her insurance policy, the insurance company will pay the entrepreneur according to the terms set forth in the policy. Without insurance, entrepreneurs could be left with expensive bills in the wake of a disaster. There are different types of business insurance, however, each of which covers different types of events.

General Liability Insurance

General liability is one of the most common types of business insurance. It’s designed to protect businesses from financial loss caused by bodily injury or property damage associated with a business’s activities. If a customer slips and falls while visiting an entrepreneur’s store, for example, he or she may sue the entrepreneur’s business for the cost of medical treatment. And with hospital treatment for slip-and-fall injuries costing an average of $30,000, according to the Center for Disease Control and Prevention (CDC), lawsuits such as this can quickly send small businesses into a downward spiral.

Commercial Property Insurance

There’s also commercial property insurance, which covers damage to a business’s property. Each year, thousands of small businesses experience disasters like fires, floods and theft. With commercial property insurance, entrepreneurs can rest assured knowing that their small business is protected from financial hardship associated with property damage. Entrepreneurs can even purchase a business owner’s policy (BOP) that includes both general liability and commercial property insurance.

Business Interruption Insurance

Commercial property insurance only compensates entrepreneurs for the cost of repairing their damaged property. It doesn’t cover the financial loss of interruption. If an entrepreneur’s small business is flooded from a burst pipe, it could take weeks to restore it. In the meantime, the entrepreneur will have to close his or her business to the public. Business interruption insurance, however, compensates businesses for the cost of this interruption, allowing entrepreneurs to stay afloat until they are able to reopen to the public.

General liability, commercial property and business interruption are just a few types of business insurance. There’s also workers’ compensation, which all businesses are required to have if they hire one or more employees, as well as commercial auto, product liability and more.