What Does Business Insurance Cover?

Business insurance can provide financial protection in the event of lawsuits, property damage, or theft. 

However, with so many different types of business insurance policies available, it can be difficult to determine what each policy covers and which policy is right for your business.

Here are the various types of business insurance policies and the specific risks they cover.

General Liability Insurance

General liability insurance is one of the most common types of business insurance policies. This policy covers your business in the event of lawsuits or claims made against your business for bodily injury, property damage, and advertising injury. 

For example, if a customer is injured on your business premises or your business is sued for copyright infringement, your general liability insurance policy will cover the associated costs, including legal fees and any settlement or judgment.

General liability insurance typically covers the following:

• Bodily injury: If a customer, vendor, or any other third party is injured on your business premises or as a result of your business operations, general liability insurance can cover the medical expenses, legal fees, and other related costs.
• Property damage: If your business causes damage to someone else’s property, such as a customer’s car or a vendor’s equipment, general liability insurance can cover the costs of repairs or replacement.
• Advertising injury: If your business is accused of false advertising or copyright infringement, general liability insurance can cover legal fees and damages.

Professional Liability Insurance

Professional liability insurance, also known as errors and omissions insurance, protects businesses that offer professional services, such as lawyers, doctors, and accountants. 

This type of policy covers claims made against your business for negligence, errors, or omissions that result in financial harm to a client. Professional liability insurance can help cover legal fees, court costs, and settlements or judgments.

Professional liability insurance typically covers the following:

• Negligence: If your business makes a mistake or fails to perform a service, professional liability insurance can cover damages and legal fees associated with a lawsuit.
• Errors or omissions: If your business provides inaccurate or incomplete advice, professional liability insurance can cover costs associated with a lawsuit.
• Financial harm: If a client suffers financial harm as a result of your business’s professional services, professional liability insurance can cover the costs of a lawsuit.

Workers' Compensation Insurance

If you have employees, workers' compensation insurance is required in most states. This policy covers the costs of medical bills and lost wages for employees who are injured on the job. It also protects your business from lawsuits related to workplace injuries.

Workers' compensation insurance typically covers the following:

• Medical expenses: If an employee is injured on the job, workers' compensation insurance can cover medical expenses, including doctor’s visits, hospital stays, and prescription medication.
• Lost wages: If an employee is unable to work due to a workplace injury, workers' compensation insurance can cover a portion of their lost wages.
• Rehabilitation: If an employee requires rehabilitation after a workplace injury, workers' compensation insurance can cover the costs.
• Legal fees: If an employee sues your business related to a workplace injury, workers' compensation insurance can cover legal fees and any settlement or judgment.

Property Insurance

Property insurance, or commercial property insurance, protects your business property, including your building, inventory, and equipment, against damage or loss caused by unexpected events such as fire, theft, or natural disasters.

Property insurance typically covers the following:

• Building damage: If your business property is damaged or destroyed by an unexpected event, such as a fire or a natural disaster, property insurance can cover the costs of repairs or rebuilding.
• Inventory loss: If your business’s inventory is damaged, destroyed, or stolen, property insurance can cover the cost of replacing or repairing it.
• Equipment damage: If your business equipment is damaged or destroyed, property insurance can cover the cost of repairs or replacement.
• Loss of income: If your business is unable to operate due to damage or loss of property, property insurance can cover the loss of income during the period of restoration.

Business Interruption Insurance

Business interruption insurance, also known as business income insurance, covers the loss of income and operating expenses when your business is unable to operate due to a covered event, such as a fire or natural disaster. 

This insurance policy can help keep your business afloat during the period of restoration and ensure that you can continue to pay bills, employee salaries, and other expenses.

Business interruption insurance typically covers the following:

• Lost income: If your business is unable to operate due to a covered event, business interruption insurance can cover the loss of income during the period of restoration.
• Operating expenses: If your business is unable to operate due to a covered event, business interruption insurance can cover operating expenses, such as rent, utilities, and loan payments.
• Relocation expenses: If your business needs to relocate temporarily during the period of restoration, business interruption insurance can cover the costs of relocation.

Business Auto Insurance

Business auto insurance, also known as commercial auto insurance, covers your business vehicles and drivers in the event of an accident or damage to the vehicle. This policy can help cover the costs of repairs or replacement of the vehicle and medical expenses for any injured parties.

Business auto insurance typically covers the following:

• Vehicle damage: If your business vehicle is damaged or destroyed in an accident, business auto insurance can cover the cost of repairs or replacement.
• Injury or death: If an accident involving your business vehicle results in injury or death to another party, business auto insurance can cover medical expenses, legal fees, and damages.
• Uninsured or underinsured motorists: If you or your employees are involved in an accident with an uninsured or underinsured driver, business auto insurance can cover the costs of damages and medical expenses.

Below are some common questions people ask concerning business insurance. We’ve put together the following guides to help you select the right insurance for your business.

Click on any guide to learn more:

If you're ready to purchase business insurance, here are the steps you should follow:

1. Identify your business's specific insurance needs based on the types of risks your business faces.
2. Research insurance providers and policies that align with your business needs.
3. Get online quotes to compare coverage options and costs.
4. Review and compare the coverage, limits, and deductibles offered by each policy.
5. Choose the policy that best fits your business needs and budget.
6. Purchase your policy and keep a copy of your insurance policy in a safe place.

Remember, the cost of insurance is small compared to the cost of not having it when you need it the most. So, invest in the right business insurance policies today and secure the future of your business.