What Types of Business Insurance Do I Need?

Having the right kinds of business insurance can make the difference between staying in business after a catastrophe and watching your life’s dream of owning a business disintegrate. When you own a business, you likely search for ways to cut expenses, but saving a few dollars on insurance premiums could cost you everything. 

A Maryland business attorney can talk with you and help you develop a strategy for properly insuring your company. Insurance needs vary based on many different factors. You will not want to use a one-size-fits-all approach to the coverage that is appropriate for your business. Let’s explore the question, what types of business insurance do I need?

Combo Insurance – A Business Owner’s Policy

A good option for basic business insurance coverage is a business owner’s policy (BOP). A BOP is a combination of these types of coverage:

• Business income insurance. One of the many lessons learned from the pandemic is that life can come to a screeching halt without warning. Many businesses went under when they had to suddenly shut down. Business income insurance could help your business stay afloat when disaster strikes. You will want to read the exclusions carefully to discover what types of situations your policy covers and things the insurer does not cover. Some companies call this type of coverage business interruption insurance. The proceeds could pay for your business expenses until you can open your doors again.

• Commercial property insurance. If you own or rent your business location, you will want coverage to pay for damage or losses to the property. Think of commercial property insurance as the business version of homeowner’s insurance. Commercial property insurance can also cover the equipment you use. Usually, you will need to buy a separate policy for earthquake or flood insurance coverage, as commercial property insurance rarely covers losses from those events.

• General liability insurance. This catchall coverage can protect you from many types of claims you might otherwise have to pay out of business revenues or your own pocket. As with other types of insurance, be sure to read the disclaimers about exclusions from coverage. General liability insurance typically covers claims that blame your company for harming someone else, like damaging someone else’s belongings or property, engaging in libel or slander, or physically harming someone. 

Make sure that your insurance coverage is customized to your company. Avoid spending money on premiums that include coverage you do not need. By tailoring your coverage, you might save money you could then use to provide enhanced insurance where you really need it.

Cyber Insurance

Many businesses experience breaches of their data. While data breach insurance does not prevent hackers from accessing the personally identifiable information of your employees or customers, the coverage can help with the expenses of crafting a public relations campaign to address the fallout from the incident, notifying the people whose data got lost or stolen, and offering those individuals identity theft monitoring services.

Commercial Umbrella Liability Coverage

Many people buy add-on coverage to their homeowner’s insurance that gives them a higher level of liability protection than other liability policies offer. A commercial umbrella liability policy provides this type of additional liability protection for businesses. Typically, the insured company would have to pay a claim out of the specific liability policy first and pay any excess settlement or judgment out of the umbrella liability coverage.

Commercial Auto Insurance  

Whether you own a company that provides mobile services, delivers products to customers, or provides company cars to employees for business use, you should have commercial automobile insurance. Personal auto insurance policies tend to exclude property damage and personal injury claims from third parties that arise out of a collision with a vehicle owned by a business.

No matter how carefully you and your employees drive, you should have commercial auto insurance on all business-owned vehicles. Having this type of coverage helps you stay in compliance with legal requirements, satisfy your contractual obligations with other companies with whom you do business, and protect your company from expensive claims and litigation.

Worker’s Compensation Insurance

Most companies that operate in Maryland are required to carry worker’s compensation insurance. This type of insurance can pay the medical bills of your workers if they get injured on the job or develop a work-related illness. Additional worker’s compensation benefits include:

• Paying most of a sick or injured worker’s missed paychecks while they are recuperating and cannot work.

• Covering ongoing treatment, like physical therapy.

• Paying a fixed amount toward funeral and burial costs if a worker dies from a job-related illness or injury.  

If you are required to carry worker’s compensation, but you do not, you could face penalties under Maryland law. Also, a worker might be able to sue your business directly for their personal injuries from a work-related injury or illness if you do not carry the required worker’s compensation coverage. Employees usually cannot sue their employer for an on-the-job illness or injury if they receive worker’s compensation benefits.

Making the Right Decision About Business Insurance Coverage

The types of business insurance coverage you need are probably not identical to the business that is down the street from your office. The fact that there is no easy answer to the question of what types of business insurance coverage you need makes it challenging to figure out what kinds of business policies to buy.

You will want to have all the coverage that Maryland and federal laws require for your industry. Next, you will want to consider the risks inherent in your business so you can get the appropriate insurance to protect you from financial losses. 

It would be prudent to comparison-shop because premiums can vary widely from one insurance company to another. You will want to make sure that you are comparing apples to apples on the coverage and policy limits. Many business owners request quotes from three or four companies. Make sure the companies are reputable and have been in business for a long time.

A Maryland Business Attorney can help you develop your business insurance strategy as part of your overall business plan. Contact Steve today.