Business insurance offers protection from the financial impact of certain risks. Several different types of business insurance are available, and each business has unique needs.
Some policies combine business liability and commercial property insurance, while others cover specific issues like business interruption. Regardless of the type of coverage, it’s essential to re-assess your business needs annually.
Business Owner’s Policy (BOP)
A BOP is a policy package designed with the most common business needs in mind. The package combines property and liability coverages into one, which can make it easier to manage risk and often less expensive than buying individual policies.
The property portion of a BOP protects commercial buildings and their contents (like furniture, computers and inventory) from physical damage. It also offers liability protection that can pay for third-party injuries, advertising injury and property damage resulting from business operations.
Some policies that businesses need, such as workers’ compensation and commercial auto insurance, aren’t available in a BOP. These are typically purchased in addition to a BOP.
General Liability
General liability protection is one of the most important types of business insurance. It can cover things like a customer slipping in your store and breaking their ankle, or a client’s property being damaged by a service provided by your company. It also covers lawsuits alleging reputational harm (libel or slander) and false advertising/copyright infringement.
Typically purchased on its own or as part of the BOP, this is a must for any business that is open to the public, works with clients, rents or owns commercial space, and/or uses employee labor. See how this coverage compares to other insurance options, including commercial auto and workers’ compensation.
Commercial Auto
You might need commercial auto insurance if your business uses cars, trucks, vans or other vehicles. This coverage provides liability and physical damage protection for vehicles that your company owns, leases or rents.
It protects you if your employees cause an accident while they’re working, or if a non-employee drives one of your cars. It also pays for medical expenses for people injured in your vehicles.
It’s often offered in combination with BOP and typically costs less than purchasing it separately. It’s available for cars and trucks used for business purposes only. This includes delivery vehicles, service vehicles and tools-of-the-trade vehicles. The policy covers collision loss and comprehensive loss, which is damage to your car from causes other than an auto accident.
Business Interruption
Business interruption coverage provides financial protection in the event of a disaster that disrupts your operations. This type of insurance covers extra expenses beyond your normal operating costs, including things like leasing temporary space and paying overtime for employees.
One of the biggest stipulations with this policy is that direct physical property damage must be present for it to kick in. It also typically only covers losses related to covered perils, such as fire, wind, lightning, and falling objects.
Leader locations (like popular restaurants, shopping centers, and stadiums) are often included as well. However, it’s important to check the specifics of your business interruption policy.
Employment Practices Liability Insurance (EPLI)
Employment Practices Liability Insurance (EPLI) helps protect your business against claims involving wrongful termination, sexual harassment, discrimination, and other employment-related issues. You can purchase EPLI coverage through your BOP or as a stand-alone policy.
The cost of EPLI varies depending on the size of your business, industry, turnover rate, and claims history. It’s also important to determine whether you need a claims-made or an occurrence-based policy, as these policies differ in their pricing.
Unlike professional liability insurance, which covers your business for mistakes made by your employees, EPLI does not cover rights reserved claims by clients or customers—for these, you may need to obtain Directors and Officers Liability Insurance (D&O). This type of coverage is typically sold as an endorsement to the BOP or as a separate policy.
Professional Liability Insurance (PLI)
Professional liability insurance (PLI) covers a company from financial loss associated with alleged or actual negligence that occurs during the fulfillment of a professional service. Also known as errors and omissions coverage, it’s often required by clients or mandated by industry bodies like state licensing boards.
While it doesn’t offer the broad coverage of a BOP, PLI is still one of the most important forms of business insurance. It’s essential for any businesses that provide advice or skilled services and can help cover legal costs, damages and settlements. It also pays for disciplinary proceedings and other costs related to investigations by regulatory bodies. assurance pro