Business insurance protects business owners from a wide variety of damages or losses that could occur to their company. Several types of insurance fall within the category of business insurance.
General liability insurance protects businesses against legal issues like negligence claims, personal injury claims, libel, and slander. The insurance coverage should pay for any settlement costs as a result of these claims as well as the cost of legal representation for the business.
Professional liability insurance applies to businesses that offer any type of service. This insurance protects business owners against any malpractice or negligence claims from customers who have received the service. Depending on the service provided, some states require businesses to have professional liability insurance.
Product liability insurance is similar to professional liability insurance, but protects businesses that manufacture or sell a product rather than a service. If a defective product harms or injures a client, product liability insurance will cover the cost of an injury claim or settlement.
Business auto insurance covers any automobiles a business owns and covers the cost of any damages caused by an automobile accident.
Commercial property insurance covers the cost of damage to company property from events like fire, vandalism, extreme weather, natural disasters, or other accidents. Some commercial property insurance policies will also cover damage to company papers, company computers, or lost income caused by the accident.
In order to determine rates, insurance companies look at data and historical information from similar businesses. They evaluate the company's potential risks to determine an appropriate insurance rate. Rates vary depending on the size of the business, the good or service the business provides, and the amount of risk involved with the business.
Laws for this type of insurance vary by state. Although businesses are not always required to have insurance, it protects companies and their owners from paying out-of-pocket for any accidental damages.