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Different Types of Business Insurance Coverages You Will Need

The importance of having business insurance coverages in the United States cannot be overemphasized. If nothing else should motivate you to have one, I’m sure the current global pandemic is already enough reason.

We live in a world of uncertainty. Business can be booming today and tomorrow, a minor attack around your neighbourhood will force every business to close up. It could be a natural disaster like the flood that happened in Texas in September 2019 forcing businesses to close up for weeks until intervention came.

During these days of downtime, your business income will drop rapidly, your properties will be damaged and you won’t have any income coming in to pay your staff. If there were products you had before the flood came they will all be destroyed.

However, you won’t be feeling the pain like everyone else if you have business insurance coverage and you’ve been paying your premium promptly.

In a situation like that, all you need to do is to file a business insurance claim and your insurer will pay you for all the losses

Business insurance helps your business from going bankrupt by taking up all the liabilities.

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In today’s article, we will show you five types of business insurance coverages you must purchase to ensure that your business in Australia, the United States, Canada and the U.K. are fully protected.

1. Commercial property insurance

Commercial property insurance is a must-have insurance your business needs from the very first day you begin operation. If you are privileged to work with a professional business insurance broker they must have told you the same thing.

The furniture in your office, the factory equipment, the signage, etc., are a few of the properties that your commercial property insurance covers. 

It doesn’t matter whether you are operating your business in a rented apartment or in your own building, this business insurance coverage is important to protect your company in the event of theft, fire outbreak or any unintentional damages.

2. General liability insurance

In running your business, there’s the possibility of your product or business causing bodily injury to someone else or a damage to someone’s property by your business. This might lead to a medical emergency or legal suit. 

General liability insurance helps to protect your business from liability claims that would have eaten into your pocket. Even if you are asked to settle out of court, the amount you might be required to pay will still be huge and without insurance taking over it, your business might not survive it.

This is where most personal injury lawyers become so relevant when there’s a bodily injury. 

Depending on the company you choose to purchase your policy from, you can get general liability insurance coverage for as low as $60 per month.

If your business manufactures a product that the general market consumes, you must need product liability insurance coverage in addition to that.

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3. Workers’ compensation insurance

One of the most exciting things about the best companies to work in the United States is that they always have workers’ compensation insurance coverage for their workforce.

Workers’ compensation insurance coverage takes care of claims arising from workplace injuries, missed wages and medical expenses. 

If an accident happens in the workplace to a staff member in the course of discharging their duty, this workers’ compensation insurance will be set in full force to pay them for the missed wages and medical expenses. The worker ought not to pay from their pocket nor the company too. The right type of business insurance can sort it out.

In most states in the United States, workers’ compensation insurance is mandatory, especially if you are a contractor or you work in a high-risk industry.

The Work Injury Compensation Act (WICA) which is overseen by the Ministry of Manpower lets employees make claims for work-related injuries or diseases, without having to take legal action.

According to the National Safety Council, the average cost of a workers’ compensation insurance claim is $40,000 and can be even higher depending on the industry you are. Not many businesses can afford this, hence the reason why you must purchase the workers’ compensation insurance policy.

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How to get the best business insurance quote is by hiring the services of a professional business insurance broker near you that has worked with businesses like yours in the past.

4. Business income insurance

Business income insurance which is also known as business interruption insurance is a type of business insurance coverage where insurance is paid to a policyholder over the loss of their net income or operating expenses incurred when physical damages or disaster resulted in the suspension of business operation.

As a small business owner, it’s an act of disservice to your business not to do everything within your powers to reduce your business risk and protect it from going bankrupt as a result of business operation interruption.

When there’s a fire outbreak, business income is lost and the business owner is forced to move to a new location or wait until the building and equipment are renovated. Your business interruption insurance covers for the loss in income and the expenses of relocating the business to a new location.

Here’s a simple strategy you can use to calculate your business income for insurance.

  1. Calculate your total revenue
  2. Subtract your operating costs and business expenses from your total revenue
  3. Deduct your taxes from this amount and you will arrive at your business net income. 

This net income is your business income which you can present when purchasing business income insurance policy.

Do not forget to set your business’ maximum indemnity period correctly which represents how long your profit needs to be protected by insurance during the time of crisis before it returns to its previous financial position.

The best business insurance calculator is the one you executed together with the help of your professional broker.

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5. Data breach insurance

Data breach insurance is also known as cyber insurance. This is a form of business insurance coverage where an insurance company pays you a claim in the event of any business loss or expenses resulting from disclosure, theft loss, inaccessibility or manipulation of a company’s data.

The Data Breach Insurance Act was sponsored by Perlmutter Ed. in 2016 in Congress. According to the Act, “the data breach insurance credit determined under this section for the taxable year is an amount equal to 15 percent of the aggregate premiums paid or incurred by the taxpayer during such taxable year for qualified data breach insurance.”

When data is stolen from a company through cyber attack, any monetary loss incurred by the policyholder due to that data loss will be fully taken care of by the insurer.

To get the best data breach insurance quote, you will need to shop around, ask colleagues for recommendations, check out some licensed agents in your state insurance commissioners list and hire a business insurance broker to guide you in making the best choice.

One of the key reasons why every small business owner should add data breach insurance coverage as one of their business insurance coverages is because the average cost of data breach to a small business is $174,000 USD. 

This $174,000 financial loss is an expensive one for a small business owner to survive the implication hence the need for cyber liability insurance coverage.

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