It is prudent for any business to purchase a number of basic types of insurance. Some types of coverage are required by law, others simply make good business sense. The types of insurance listed below are among the most commonly used and are merely a starting point for evaluating the needs of your own business.
Liability InsuranceBusinesses may incur various forms of liability in conducting their normal activities. One of the most common types of liability is product liability, which may be incurred when a customer suffers harm when using the business' product. There are many other types of liability, which are frequently related to specific industries.
Liability law is constantly changing. An analysis of your liability insurance needs by a competent professional is vital in determining an adequate and appropriate level of protection for your business.
PropertyThere are many different types of property insurance and levels of coverage available. It is important to determine the property you need to insure for the continuation of your business and the level of insurance you need to replace or rebuild. You must also understand the terms of the insurance, including any limitations or waivers of coverage.
Workers' CompensationMost employers are required to provide workers' compensation coverage for their employees. This coverage applies to injuries incurred by workers in the course of their job duties. A workers' compensation policy is purchased from a private insurance company or through the State Compensation Insurance Fund at (408) 363-7600.
Business InterruptionWhile property insurance may pay enough to replace damaged or destroyed equipment or buildings, how will you pay costs such as taxes, utilities and other continuing expenses during the period between when the damage occurs and when the property is replaced? Business interruption (or "business income") insurance can provide sufficient funds to pay your fixed expenses during a period of time when your business is not operational.
Key Man InsuranceIf you (and/or any other individual) are so critical to the operation of your business that it cannot continue in the event of your illness or death, you should consider "key man" insurance. This type of insurance is frequently required by banks or government loan programs. It can also be used to provide continuity in operations during a period of ownership transition caused by the death or incapacitation of an owner or other "key" employee.
AutomobileIt is obvious that a vehicle owned by your business should be insured for both liability and replacement purposes. What is less obvious is that you may need special insurance (called "non-owned automobile coverage") if you use your personal vehicle on company business. This policy covers the business' liability for any damage which may result for such usage.
Officer and DirectorUnder certain circumstances, officers and directors of a corporation may become personally liable for their actions on behalf of the company. This type of policy covers this liability.
Home OfficeIf you are establishing an office in your home, it is a good idea to contact your homeowner's insurance company to update your policy to include coverage for office equipment. This coverage is not automatically included in a standard homeowner's policy.