Type of Business Insurance: Which is Right?

A multitude of insurance options are available to fit businesses specific needs and concerns. Although this is a good thing, trying to determine the best policies to cover your business’ needs can be overwhelming. There are many types of business or business insurance in Guelph.

Common types of insurance include accounts receivable, business income, business interruption, commercial automobile, commercial general liability, commercial property, crime, director’s and officer’s liability, home business, professional liability, and product liability. A few of these insurance types are outlined below. Unique types of commercial insurance are also available, such as farm or marine insurance.

Insurance policies can be purchased to insure against the risk of interruption to your business, such as in the event of equipment failure, water damage, or fire, etc. The reason for such insurance is that it might be difficult – if not impossible – to carry on business without your workspace, machinery, equipment, or inventory or other aspects of your business in working order.

Business interruption policies, also known as business income policies, cover various losses, including:

• Profits lost by virtue of the accident at issue
• Operating expenses that are unavoidable and continue on regardless of the accident (for example, the ongoing payment of wages to employees, utilities, etc.), the costs of licensing the business, etc.
• Temporary relocation – the costs of temporarily relocating the business until the usual premises can be rebuilt of restored

The policy you choose will be for any risk that is not specifically excluded from your policy or otherwise for named perils listed.

If the continuing success of your business is contingent on having a physical premise at a particular location to work from and/or where expensive, complex machinery and equipment are necessary to conduct business, obtaining a business interruption policy will be particularly critical.

If your business owns a fleet of cars or trucks to be used for commercial purposes, you must ensure that you purchase the appropriate car insurance policy to cover your business activities and all employees who will be using the vehicles. This means that you will need to take out a commercial auto insurance policy for these vehicles, as your employees will not be able to rely on their personal policy.

A commercial general liability insurance (CGL) policy will provide certain protections, in the event that your business’ services cause injury or property damage to a third party. For example, if you own a hotel or restaurant, a patron may slip and fall on the premises and decide to sue. If this happens, a general liability policy will generally cover the costs of defending such a claim and the settlement of the claim itself.

CGL policies will provide liability limits to suit your business needs. If your business is home based, your homeowner’s insurance may contain certain limitations and a commercial general liability policy should be considered. It is important to be aware, however, that a CGL policy generally does not cover liability for injuries or losses caused by defects in products manufactured by the insured company.

Property insurance is important to have because it protects your property and the contents of your property. Most companies conduct work in a physical location outside of the business owners’ or employee’s homes. Whether you are leasing or own an office, factory, studio, or another type of property, you will want to ensure your property is protected.

If your business owns the property, you will want to make sure that your insurance policy adequately covers the expense of rebuilding in the event of a fire, flooding, or other accident. Insurance policies are very specific with respect to the specific types of events that will be covered, especially when it comes to water damage. Always review these provisions with an experienced insurance agent.

In addition to physical working space, your company could own substantial office equipment, furniture, machinery, and business inventory. If your business keeps a substantial amount of inventory on the premises, you will be especially interested in taking out a policy to cover these contents in their entirety. Doing so will involve reviewing the total value of goods, reporting to your insurer, and updating your insurer any time where the value of goods being kept on the premises substantially changes.

If your company is in the business of manufacturing a product that poses potential hazards, or could possibly be defective, you are best to obtain protection against any potential product liability claims. This is especially important if your business is not incorporated and losses therefore could become your personal liability.

When it comes to the product liability insurance, there are complex distinctions between manufacturers, sellers and intermediaries, and the types of incidents that are covered under these policies. If you are considering whether a product liability policy is necessary for your business, your insurance broker in Guelph can advise you.

Understanding the purpose and limitations of various types of insurance policies can be difficult. While it is good to educate yourself, it is always wise to speak to an insurance broker to determine which specific insurance products are best suited to your business needs. We can assist with a claim should there be a need. Contact us for a free business insurance quote that suits your business.