There are many different types of insurance to choose from, it can be overwhelming to determine what type is best for your small business. R.C. Keller & Company is here to help explain the types of insurance policies available and how they can help protect you, your employees and your business’ bottom line.
General Liability Insurance
A general liability insurance policy typically covers an organization for claims involving bodily injuries and property damage resulting from its products, services or operations. This form of insurance can help cover medical expenses and attorney fees resulting from bodily injury or property damage claims for which your organization may be legally responsible.
General liability insurance policies typically have four coverage elements:
- Premises liability is coverage for in the event that a person who is not employed at your business becomes injured on your property. If someone were to sue your business because they tripped and fell on your property, liability insurance can help cover those expenses.
- Products liability covers you if a product or service causes injury to someone’s body or inflicts damage on a consumer’s personal property. If you are a tech company that broke a customer’s computer while performing a service on it, those damages could be covered.
- Personal injury is coverage for when your business inflicts a physical, financial or mental injury to a third party. An example of this would be if you were to take action in detaining someone who you had reason to believe was stealing for your store. If it turns out that your accusations are false and the person decides to sue you, your general liability policy would cover it.
- Advertisement injuries are caused by alleged misinformation, copyright infringement or slander made by your company. Let’s say you were advertising a product that claimed it could help clear acne and it ends up making a consumer’s acne worse, that could be considered an advertisement injury.
Your small business should carry a general liability policy because it is beneficial for coverage of any medical bills or legal costs that accrue if the injured third party decides to sue your business.
Commercial Property Insurance
If your business were to sustain a catastrophic event like a fire, explosion, burst pipe, storm or theft; a commercial property insurance policy will compensate you for the losses or damages to your building, leased or owned equipment and other property on the premises. Commercial property insurance can also cover items such as furniture, inventory, computers and anything that would be considered necessary for performing normal business operations.
You typically purchase commercial property insurance as a stand-alone policy or as a part of a comprehensive business owner’s policy that includes property and general liability coverage. Commercial property insurance is offered on either a replacement cost or actual cash value basis.
- Replacement cost: Pays the cost to replace or repair the damaged property with materials of like kind and quality, without any deduction for depreciation.
- Actual cash value: Pays the cost to repair or replace the damaged property, minus depreciation.
Employment Practices Liability
Employment practices liability insurance (EPLI) is a form of insurance that covers wrongful acts that occur during the employment process. The most frequent types of claims covered under an EPLI policy include claims of discrimination, sexual harassment, retaliation and wrongful termination.
An EPLI policy will reimburse your company against the costs of defending a lawsuit in court and for judgements and settlement. It also covers the legal costs, whether your company wins or loses the suit. Keep in mind, however, a policy like this typically does not pay for punitive damages or civil or criminal fines.
A worker’s compensation policy is important in the event that one of your employees suffers a work-related injury or illness. This type of policy is required in Illinois and most other states to be used to cover medical bills or wage replacement for employees who have experience a work-related injury.
For example, if an employee pulls a back muscle while working and is unable to perform their duties, your worker’s compensation policy would help in covering any physical therapy costs as well compensating the employee for any lost wages.
When you have a worker’s compensation insurance policy, it can also protect your business from a civil suit made by an employee against your company related to their injuries.
Cyber Liability Insurance
If any part of your small business is on an online platform, it is crucial to have a cyber liability insurance policy. This insurance coverage can protect your business from a cyber attack or interruption that can cause a loss in data, revenue and the trust between you and your customers. Cyber liability insurance is not only there to protect the internal information of your company, such as employees’ social security number or financial information, but it also protects your customers’ personal and banking information.
Most cyber liability policies include both first- and third-party coverage:
- First-party coverage is for the business itself – helping your business recover from any losses after a cyber-attack.
- Third-party coverage is to cover claims by people who have been injured because of your business being hacked.
Restoring the compromised or the lost data of your business had compromised can be very costly, so having a cyber liability insurance policy is there to help cover the financial losses and the costs of any claims made against your company by your clients or other third-parties who were affected.
A commercial auto insurance policy helps cover the costs of an auto accident if you or one of your employees is at fault. This coverage can help pay for damaged property and medical expenses.
You should consider a commercial auto policy for your business if any of the following are true:
- Your business owns, leases or rents vehicles such as cars, trucks or vans.
- Your business has employees who drive their own vehicles to conduct business.
- Your business has employees who operate leased, rented or owned company vehicles.
Professional Liability Insurance
Professional liability insurance, which is also known as errors and omissions (E&O) insurance, can protect your business against claims on a service you provided which caused a client to suffer due to a mistake on your part or because you failed to perform that service.
Professional liability covers the cost of defending your business in a civil lawsuit for an alleged error or omission. Depending on your industry, a professional liability insurance policy may be required by law.
While many types of businesses need a professional liability insurance policy, you should especially consider this type of insurance if your business works directly with customers while providing services.
Looking for more information
Contact R.C. Keller & Company to help you analyze your business insurance needs and decide on the right coverage for you and your Schaumburg business. We are here to help!