Having a business means having to keep it up and fighting, despite the competition, the financial setbacks, and the economic turmoil that came and will come. A business can keep itself and its employees alive as long as it keeps up a decent stream of income and has a steady flow of customers. However, these two factors are not the only reasons why a business can stay alive up for a long period of time. A business insurance will also help keep the business afloat during times of economic and financial turmoil.
Business insurance refers to the coverage or protection of businesses against operational losses. These losses are categorized and defined in the insurance policy set forth by the company.
There are broad categories of insurance that can protect your business. You have your:
- Liabilities insurance
- Assets insurance
- Income insurance
First, we discuss liabilities insurance
Liability insurance is one of the most popular insurance policies available in the market today because it’s cheaper and costs less than other policies. If you compare it to other insurance policies, like an auto insurance, you’ll find that liabilities insurance costs lesser than full coverage. The only reason why full coverage is more expensive is because it pays out both the insured and the vehicle during collisions and covers other expenses like property damages and medical expenses incurred by you or another party.
On the upside, liability insurance only guarantees the other party’s losses, while you and your assets remain unprotected. This policy protects you from being accountable for the other party’s damages. There are different kinds of liability insurance, like general liability. This works the same way as an auto liability insurance policy, but covers your business. This policy protects your business from any third party claims. You also have your employer liability, professional liability, and D & O liability insurance. This supplements your insurance policies with other companies, like warranties from your business telephone systems.
D & O stands for DIRECTORS AND OFFICERS, intended to cover the acts for those in position of power. This puts the entire company safe from the sole actions and responsibilities that only a director or any officer is accountable for.
Employer liability is a mandatory form of insurance policy for all employers and business owners. It also referred to as a WORKER’S COMP or WORKER’S COMPENSATION. One might think that it’s intended to protect the employees, but in reality, it’s meant to protect employers from being sued in case an employee gets sick or injured.
Professional liability works like a malpractice insurance, but does not provide the same comprehensive properties and is dependent on the malpractice policies within the state and fields of expertise. The purpose of this insurance is to protect those considered as PROFESSIONALS in a given field who are not covered by general liability due to their expertise.
What about asset insurance?
Asset insurance, or also known as asset protection insurance, acts as a bridge over the gap between the third party claim and your firm’s Professional Indemnity insurance or PI policy. This kind of insurance policy provides you with a more flexible protection for partners, employees, and directors than excess PI. This policy is not part of your firm or company’s asset, but rather it is held in trust.
This insurance policy acts as a financial reserve that can meet potential costs and financial exposures if the PI limit is insufficient to cover a catastrophe of a claim. One should also keep in mind that this is not a replacement for your PI, so a prudent sum insured needs to be purchased.
Asset protection insurance functions differently from an asset liability policy. For starters, this kind of policy is only available to LLPs, limited liability firms, and traditional partnerships. This policy is tailor-made to suit your firm’s legal structure in order to protect the assets and potential losses from investments at risk from third party claims.