The business world is fraught with uncertainty and risks. Therefore, as a business owner, you should take all the necessary measures to protect your business and, by extension, your savings, and personal assets.
How to Protect Your Assets With the Right Business Insurance Coverage
One of the things you can do to achieve this goal is to carry the right business insurance coverage. This is particularly important because more than 40% of businesses in the US never recover after a disaster while another 25% collapse within one year of a disaster, as reported by the Federal Emergency Management Agency (FEMA).
Additionally, according to the Insurance Information Institute (III), 40% and 75% of businesses in the US are uninsured and underinsured, respectively. In the event of a disaster, such businesses are more likely to collapse. We spoke to Smart Business Insurance and they said to protect your business and personal assets, you need to carry the right business insurance policies including:
Business Owner’s Policy (BOP)
A BOP assembles protection from all major liability and property risks into one policy. Because a BOP plan is essentially an insurance bundle, it costs less than the total cost of its constituent policies, and it’s also convenient because it makes it relatively easier to manage your business insurance policies.
A typical business owner’s policy includes liability protection, business interruption, and property insurance for assets and buildings owned by a business. Depending on your insurer, you can customize your BOP policy to meet your specific coverage needs. For instance, you can purchase additional coverage options including crime and flood insurance coverage.
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However, a typical BOP excludes health, disability, worker’s compensation, and personal liability coverage.
Commercial General Liability (CGL)
A CGL offers broad coverage against third-party liability claims, including personal injury, bodily injury, and property damage, related to your business operations, product/service offerings, or employees. It’s important to note that a CGL policy only covers damage caused by non-professional negligence.
CGL coverage is available in two options including a claims-made and an occurrence policy. The former has a time restriction in regard to covered events, whereas the latter has no such restrictions. Additionally, a CGL offers three levels of coverage.
Coverage A covers property damage and bodily injury liability, Coverage B covers personal and advertising injury, and Coverage C covers medical costs, albeit with set limits.
Commercial Property Insurance
Whether you own your business premises, lease, or have a home office, you should carry commercial property insurance. A standard commercial property insurance policy covers your business premises, and the physical contents within and outside those premises.
This means it covers everything from office furniture and equipment to inventory to important documents to fence and landscaping. Moreover, it also covers loss of income caused by a covered peril. Covered perils include, among others a building’s collapse, wind damage, theft, and fire.
Depending on your insurer, you can add endorsements on your commercial property insurance policy to increase your coverage limits. Take note that you can purchase this policy either as a standalone policy or as one of the policies in a business owner’s policy (BOP).
Workers’ Compensation Insurance
Except for Texas, all other states across the US require employers to carry workers’ comp coverage. This policy protects both employers and employees against the financial burden associated with a workplace accident, injury, or death. Specifically, it covers an injured employee’s medical costs and lost wages, and in the event of work-related death, funeral expenses.
On the other hand, it protects employers against lawsuits associated with a work-related injury, illness, or death. It’s worth noting that the average workers’ compensation claim amounts to tens to thousands of dollars. For instance, in 2071, all workers that successfully filed a worker’s comp claim for slip and fall injuries received an average of $48,000.
In total, worker’s comp claims cost U.S. businesses more than $60 billion every year, according to the National Academy of Social Insurance.
Professional Liability /E&O Coverage
If you’re in the professional services industry, this type of coverage can help a portion of your legal expenses if someone sues your business for, among other things, incomplete services, inaccurate advice, failed services, misrepresentation, omissions, negligence, and violation of fair dealing.
If someone sues you for a covered peril, your errors, and omissions (E&O) policy will cover your legal costs, including settlements, up to the specified limits.
With the surge in remote work, cybercriminals are increasingly targeting businesses that are unlikely to have adequate resources to implement a robust cybersecurity system. This means that small and medium-sized businesses are at a higher risk of a cyberattack.
Take note that according to a recent report from IBM and Ponemon, the average cost of a data breach currently stands are $4.24 million. To put it another way, a data breach could spell financial doom for you and your business. To avoid this, you simply have to purchase the right cyber insurance policy for your business.
Ideally, you should choose a policy that covers financial data, storing confidential information, accepting digital payments, and processing credit cards.
To protect your business and personal assets, carry the six essential business insurance policies discussed in this article.
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