Types of insurance businesses should consider

A popular adage business owners often learn the hard way is whatever can go wrong, will go wrong. While the universe may not operate quite so mercilessly, a business owners need to recognize risk and obtain the right insurance to protect their business from worst-case scenarios. The following are types of insurance a business should consider, each covering a different kind of risk.

General liability insurance is a type of commercial insurance policy most businesses should carry as it will afford protection against basic risks. This type of policy covers basic bodily injuries to patrons of a business's premises as well as various property damage claims.

For example, if a patron at a business is injured as a result of a slip-and-fall accident that takes place on the business' premises, general liability insurance coverage typically will protect a business owner from the financial exposure caused by such an incident, fîven if a claim is unlikely to be successful, it can prove expensive to defend against the claim. The general liability policy covers that cost as well.

Commercial property insurance covers the physical assets of a business, such as equipment or inventory, and protects it from losses due to property damage that occurs as a result of property that is lost, stolen or damaged due to natural catastrophes like a storm or fire. If a business does not own the building in which it operates, it may still be imperative to have commercial property insurance to cover equipment or inventory housed within the premises.

Premiums will vary depending on whether they cover the replacement cost or the actual cash value of the iasured property. A replacement-cost policy bases the reimbursement amount on the total amount spent to replace the items at current market prices, while an actual cash value policy reimburses a business for the property 's depreciated value. Predictably, replacement-cost insurance policies have higher premiums because they allow a business to replace all lost or damaged property with new items without taking into account the depreciation of the property.

Commercial automobile insurance is important for any business that owns or leases one or more vehicles. A vehicle that is owned by an individual but used primarily for business purposes should also be covered by commercial automobile insurance as opposed to private automobile insurance.

Commercial automobile insurance covers a business' property and passengers. While commercial property insurance protects potential exposure from equipment sitting on a business's premises, the risk of equipment being damaged while being transported is typically covered by commercial automobile insurance. In addition, all business owners are obligated to care for their passengers when they are driving, even if transporting those passengers is ancillary to the business' main operation.

While the types of insurance reviewed above generally protect businesses from damages arising out of physical harm to a business' property, its patrons and its employees, another risk that many businesses are exposed to arise out of the services performed by the business.

Professional liability insurance protects professionals such as lawyers, doctors and accountants from claims by clients that a professional's services caused them to suffer a financial loss. This type of coverage may be essential because general liability insurance policies typically exclude protection against such claims.

Most professional liability insurance policies are sold on a "claims-made" basis. This meaus that the insurance only covers work performed while the policy is in force and for claims filed during the term of the policy. Any claims submitted after the cancellation of a professional liability policy would not be covered, even if the work performed which triggered the lawsuit took place while the policy was in effect. Therefore, it is important for any business offering professional services to always maintain coverage to avoid exposure to what can be potentially crippling claims.

A business owner must carefully consider which insurance coverage will provide the protection their business needs in the event it is exposed to a worst-case scenario. Obtaining the right coverage often decides winners and losers in the marketplace.