Most people have insurance of some kind, whether it’s health, car, or home insurance. They realize their daily risks and want to protect themselves and their families as much as possible. However, few take the time to understand insurance and how it works thoroughly. Not only that, but with so many policies and options available, it’s easy to feel overwhelmed.
In business, insurance is critical. An unexpected accident or lawsuit could damage a small company’s reputation and finances or cause bankruptcy in the worst case. If you own a business, one type of insurance you should be aware of is contractors’ insurance. Contractors work in various industries and are typically self-employed. Therefore, they don’t have the same level of protection as employees who work for a company.
This blog post will discuss business and contractors’ insurance, how they work, and what they cover. We’ll also explain the benefits of each and who needs them. Finally, we’ll touch on general liability insurance, a policy that small businesses may find suitable. Whether you’re a business owner or an independent contractor, this post will help you make informed decisions about the insurance you need.
What Is Business Insurance, And How Does It Work?
Business insurance is a type of insurance that helps protect businesses from financial losses. Depending on the policy, it can cover property damage, liability claims, lost income, and more. Companies can purchase insurance policies to cover specific threats or comprehensive coverage that protects against multiple risks.
When a business buys an insurance policy, the insurer agrees to pay for certain damages or losses that might occur in the future. In exchange, the business pays the insurer a premium. The premium usually depends on the coverage needed and the likelihood of a filed claim.
Suppose something does happen, and you need to file a claim. In that case, the business will need to provide documentation to prove that the loss occurred and that it meets the criteria outlined in the policy. The insurer will then either pay the claim or deny it. If they deny it, the business can always appeal the decision.
What Does Business Insurance Cover?
Business insurance policies can cover plenty of risks, but there are some common types of coverage that most businesses need:
Property Damage Coverage
Property damage coverage can help pay to repair or replace business property damaged or destroyed by a covered event (fires, storms, vandalism, etc.) Business property includes buildings, equipment, inventory, and furniture. Even if you don’t own the property, you may still want this coverage if you have leased or rented equipment or inventory.
Liability coverage protects businesses from lawsuits for damages that occur as a result of their operations. If your customers or employees get injured, or if you damage someone else’s property, this type of coverage can help pay for the resulting medical bills or repairs. Most business liability policies have limits on the amount of coverage they provide.
Lost Income Coverage
Also known as business interruption, lost income coverage protects businesses from lost revenue if forced to close due to a covered event. Business interruption doesn’t have a direct cause-and-effect relationship with the covered event but is still a result of it. For example, if a fire damages your store, this coverage can compensate for part of the income you could’ve earned while the store was closed.
Benefits Of Business Insurance
Business insurance can provide many benefits, including compliance with the law, better risk management, and building trust with customers.
Compliance With The Law
In some cases, businesses need to have certain types of coverage. Many states require companies to carry workers’ compensation insurance if they have employees. With the right insurance, businesses can avoid hefty fines or other penalties.
Better Risk Management
Businesses that carry insurance can transfer some of the financial risks of doing business to their insurer. This way, companies can manage their risks more effectively and protect their finances in the event of a loss.
Building Trust With Customers
Business insurance can also help businesses build trust with customers or clients. When people do business with you, they want to know that their interests are safe in case something goes wrong. Insurance can show them that you’re a responsible business owner prepared for the worst.
Who Needs Business Insurance?
There’s no one-size-fits-all answer to this question since every business is different and has different risks. However, most companies will require some coverage. Insurance is typically a wise investment when you balance the cost of premiums with the potential cost of a covered loss.
The types of coverage your business needs will depend on several factors, including your industry, the size of your company, and the products or services you offer. For example, a small home-based business might only require property damage and liability coverage. On the other hand, a larger company with employees might also need workers’ compensation, lost income, and health insurance.
What Is Independent Contractors Insurance, And How Does It Work?
Independent contractors insurance is a type of insurance that protects businesses that hire independent contractors. The insurance covers the company if the contractor causes damage to property or injury to people while working on its behalf. It also provides coverage if the contractor fails to perform their work as agreed upon or if they cannot complete their job due to illness or injury.
In most cases, businesses don’t have to carry this type of insurance, but it’s always a good idea to have it in place just in case. When shopping for a policy, ask about any special discounts available for businesses that hire independent contractors.
Who Needs Independent Contractors Insurance?
Businesses that hire the following types of contractors should consider carrying independent contractors insurance:
- HVAC technicians
- Railroad contractors
- Security guards
- Window cleaners
Policies That May Include Independent Contractors’ Insurance
Some insurance policies may provide coverage for businesses that hire independent contractors, including general liability, commercial property, and BOPs. We’ll delve deeper into general liability insurance in the next section. Below is some information about the other two types of policies.
Commercial Property Insurance
This insurance covers a business’s property, including the building, equipment, inventory, and furniture. It also covers any loss of income the business suffers due to property damage.
A BOP, or business owner’s policy, is a type of insurance that bundles several types of coverage, including property damage, liability, and lost income. Small businesses with fewer risks typically use this policy.
What Is General Liability Insurance, And How Does It Work?
General liability insurance protects businesses from various claims, such as bodily injury, property damage, personal injury, and advertising injury. As we mentioned, BOPs usually include this coverage, but you can also purchase it as a standalone policy.
Most general liability policies have an aggregate limit, the maximum amount the insurer will pay for all claims under the policy. Suppose a policy has a $500,000 limit per occurrence and a $750,000 aggregate limit. The insurer will only pay up to $750,000 for all claims regardless of the number of events.
What Does General Liability Insurance Cover?
Typically, general liability insurance covers the following events:
- A team member accidentally damages a customer’s property while delivering a product.
- A customer slips and falls in your store and needs medical treatment.
- You’re sued for false advertising.
- You unintentionally violate another business’s copyright.
- A natural disaster damages your property.
However, it’s important to note that there are some things that general liability insurance doesn’t cover. Most policies exclude professional liability or errors and omissions insurance. It would be best to understand the exclusions in your policy, so you know what’s covered and what isn’t.
Who Needs General Liability Insurance?
Businesses of all sizes can benefit from general liability insurance. However, small companies can particularly benefit from this insurance because they don’t require much coverage. For instance, a small business owner might only need general liability insurance to cover the basics. On the other hand, a larger business with more employees and customers might need a more comprehensive policy that includes coverage for product liability and professional liability.
If you’re a business owner, you can assess your business’s risks and decide how much coverage you need. Your coverage amount will also determine how much you’ll pay for your policy. Remember that there’s always the possibility to expand it if necessary. You can also talk to an insurance agent or broker to get more information about general liability and other types of business insurance.
Nesso Insurance – Helping You Protect Your Business
Nesso Insurance is a committed insurance agency in Connecticut that goes above and beyond to deliver only positive experiences. We understand that selecting a policy might feel overwhelming, but you can always rely on our reputable insurance services. Let us handle the responsibility of comparing policies so you can concentrate on what’s important: running your business.
We have extensive knowledge and experience in all aspects of business insurance. We’ll work with you to find a plan that meets your budget and coverage needs. Our top priority is to help you make informed decisions for the years ahead. At the Nesso Group, we aim to relieve you of any needless worry while always putting your best interests first.