What Insurance Do I Need for My Business?
Business insurance protects your business against unforeseen costs, including accidents, liabilities, and legal action.
Key Takeaways
- There are numerous categories of business insurance
- Employers’ liability insurance is mandatory in the UK, while workers’ compensation insurance is mandatory in many US states
- It’s important to consider costs, reputation, and more when choosing a business insurance solution to handle insurance claims
- You can contact an insurance provider if you need help choosing a plan
Understanding Business Insurance
Definition and Importance
Business insurance protects businesses, and their employees and property, during events that would otherwise carry expensive costs.
This type of insurance may cover property damage and theft, liability and lawsuits, employee injuries and illnesses, worker's compensation, and customer injury.
Business insurance is important because it can help your company address risk and remain operational after unexpected events. You may find yourself unable to pay for expensive repairs, lawsuits, and other costs unless you have business insurance.
Plus, some locations, including the UK and most US states, legally require businesses to obtain certain types of insurance related to employee safety.
Assessing Your Business Risks
If you own or operate a business, you should obtain insurance. But before you choose a business insurance solution, you need to take several things into consideration.
Consider the following steps:
- Identify key risks such as property damage, employee injuries, liabilities and lawsuits, and customer injury
- Determine any mandatory insurance types that you need to obtain
- Analyse business assets, inventory, and property that could benefit from insurance coverage as well as business liabilities that need coverage
- Examine contractual liabilities, including contracts with vendors and clients that include indemnification clauses
- Consider employee needs, such as workers’ compensation, and employee benefits like health, disability, and life insurance
- Consider cybersecurity risks such as hacking, data theft, and network failures
With the right insurance, you can potentially cover losses that result from any risk. We’ll look at how each type of insurance applies in the next section.
Types of Business Insurance
General Liability Insurance
General liability insurance covers damages payments when your business is found liable for harm from its actions or neglect, plus associated legal costs.
It can cover costs related to property damage, bodily injury, personal and advertising injury (such as defamation, libel, slander, or false advertising), and medical expenses.
Your insurance plan may allow you to make a claim whether the incident occurs on business property, at an operations site, or at the location of a customer.
This type of insurance is essential for almost every business because it provides protection against a wide range of common scenarios and because it can cover legal cases that would otherwise impose great costs on a company.
Professional Liability Insurance
Professional liability insurance protects service providers against charges of negligence and harm. It can cover a variety of fines, legal, and defense costs.
This type of insurance can cover negligent acts and errors or omissions, failure to deliver a service, and media services that damage a client’s reputation. It does not provide protection against claims related to damage or bodily injury.
Sometimes, this type of insurance is called errors and omissions (E&O) insurance.
It’s important to have this type of insurance if you operate as a service provider. You should combine it with general liability insurance for maximum coverage.
Business Property Insurance
Business property insurance covers buildings and the contents of buildings.
If you own your company’s building, this type of insurance may cover damage to the building and its extensions. If you rent or lease the building, it might cover any improvements that you make as a renter, but not the building itself.
Workers’ Compensation Insurance
Workers’ compensation insurance protects your business from lawsuits that employees file concerning a workplace injury or illness.
The workers’ compensation model does not merely cover costs: it typically prevents employees from suing employers after receiving state compensation.
A related type of insurance is employer liability insurance, which covers other liabilities that may not fall under the workers’ compensation model.
In the UK, employer liability insurance is mandatory. In many US states, workers’ compensation insurance is mandatory, while employer liability insurance is optional.
Product Liability Insurance
Product liability insurance protects your company when a customer files a lawsuit alleging that your product caused injury or damage to property.
For example, customers may claim that food products caused poisoning or that a piece of electronics equipment caused a fire or explosion. Product liability insurance can cover legal costs in such claims, as well as other expenses such as recall costs.
This type of insurance is ideal for manufacturers and retailers and any other business that is part of a supply chain.
Business Interruption Insurance
Business interruption insurance provides coverage when an unforeseen event, such as a natural disaster or an equipment failure, suspends your operations.
If you make an insurance claim in this category, it can compensate for loss of income. Accordingly, it is a valuable type of business insurance for any company.
Commercial Auto Insurance
Commercial auto insurance provides coverage for business vehicles. This type of insurance can cover damage to vehicles, but it can also provide coverage for liabilities resulting from accidents, plus medical fees and repair costs.
In the UK, commercial auto insurance is mandatory for any vehicle used for business.
Cyber Liability Insurance
Cyber liability insurance provides coverage for liability resulting from cyber attacks, data loss, compromised data, ransomware incidents, and more.
This type of insurance is useful for a variety of companies, especially those that handle sensitive data, use cloud services, or provide hardware and software services.
Government offices and healthcare companies are often targeted by ransomware attacks because they hold a large amount of personal data. However, any company that deals extensively with tech can potentially benefit from cyber liability insurance.
Home-Based Business Insurance
If you operate a business from home, you can obtain home-based business insurance.
Personal homeowner insurance policies generally do not cover loss and damages from business-related activities, so it is important to combine both types of coverage.
Specialized Insurance Needs
Industry-Specific Insurance
Some types of insurance are valuable for almost every company. However, you may be able to obtain an insurance policy that is tailored to your industry.
For example:
- IT companies can obtain cyber liability insurance as well as coverage for tech errors and omissions (E&O)
- Healthcare companies can obtain coverage for medical devices, healthcare professional liabilities, and ransomware attacks
- Construction companies can obtain contractor insurance
Coverage for Small vs. Large Businesses
Insurance providers may offer different insurance models, typically with different rates, depending on the size of your business.
Other factors, such as your location and the degree of risk in your company’s operations, may also affect conditions and rates.
You should contact an insurance provider for a quote based on your exact situation or use online tools to obtain an automated insurance quote.
Legal Requirements and Compliance
UK Insurance Requirements
In the UK, businesses need to have employers’ liability insurance, which provides coverage against employee injury-related lawsuits.
You can find more details on the UK government website.
US State Insurance Requirements
Some US states require workers’ compensation insurance, which covers work-related injuries and illnesses and disability benefits.
Usually, workers’ compensation means that employees can’t sue their employer if they claim state compensation. Some plans include employer's liability coverage, which provides coverage in lawsuits that fall outside of workers’ compensation.
Additionally, some states require commercial auto insurance for company vehicles.
You can look up US state requirements on various websites, including Insureon.
Choosing the Right Insurance Provider
Factors to Consider When Selecting a Provider
You should consider various factors when choosing an insurance provider including:
- Reputation: Sites like Investopedia provide expert opinions on business insurance companies to help you choose a reputable service
- Community ratings: Websites like Trustpilot allow users to score insurance providers so you can see their standing among customers
- Coverage Options: Not all business insurance companies provide the same types of coverage — be sure to choose a business that meets your needs
- Price Comparisons: You can obtain instant quotes from various insurance providers to determine the price of similar coverage models
- Customer Service: Be sure to choose a company that has generous customer service hours, and be sure it offers support in your local time zone
Managing and Reviewing Your Insurance Policies
Regular Review and Adjustment of Policies
It’s important to review and update your business’ insurance policies as it expands or contracts. You might need different categories of coverage, and you might qualify for different rates, as circumstances change.
Be sure to discuss your situation thoroughly with your insurance provider.
Dealing with Insurance Claims
It’s important to handle insurance claims efficiently. When it’s time to make a claim, contact your insurance provider as soon as possible.
Once you file a claim, the insurance provider will begin an investigation and policy review. They will let you know of any other conditions and requirements, and later, the amount of money that you are owed.
Conclusion
If you own or operate a company, it’s important to find a proper business insurance solution. The right insurance plan can keep your company operational amidst costly lawsuits, unexpected events, and natural disasters.
Even if you believe you can afford to cover unexpected losses, business insurance is ideal — and, in some cases, mandatory.
However, it’s important to choose a type of business insurance that is suited to your company’s unique needs and any particular risks that it faces.
It can be difficult to choose an insurance plan alone. You should consult with insurance professionals to tailor coverage to your specific needs.
Frequently asked questions
What is a multi-currency account/virtual IBAN?
A Payset multi-currency account allows you to receive money in 34 different currencies and send money in up to 38 currencies, all within the same account.
You can deposit and withdraw funds, convert currencies at competitive exchange rates, and hold your chosen currencies to capitalize on market movements.
A Payset multi-currency account allows startups and business owners to receive payments from clients virtually anywhere in the world and pay suppliers, staff, and contractors quickly and affordably in their chosen currency.
- Funds can be deposited and withdrawn from the account for a small fee.
- Account holders can send and receive money with other Payset users for free.
- Depending on your region, you can use various payment networks from your Payset account, including SWIFT, SEPA, ACH, Fedwire, Faster Payments, BACS, and CHAPS.
- Once you register an account, you will be provided with a Virtual IBAN (International Bank Account Number), which makes all of these transfers easy.
- We provide you with local payments and collections. For example, transactions in USD, EUR, CAD, and GBP are processed through the local payment networks, which is far cheaper and takes minutes as opposed to days
Are there limits on the amount of money I can send and receive?
No, there are no transaction limits on Payset multi-currency accounts.
However, higher-volume transactions may require additional anti-fraud verification. If you plan to make a large transaction, contact us in advance to avoid verification delays.
How is Payset regulated?
Payset is regulated as an authorized Electronic Money Institution by the UK Financial Conduct Authority. Our activities are also regulated by the Payment Services Regulation 2017 and the Electronic Money Regulation 2011 (SI 2011/99).
How do I add money to my account?
How do I send money from my account?
Once you have opened your verified IBAN account and added money to a balance, transferring funds is simple.
Simply log in into your account and add a beneficiary, then simply “make a transfer” in your preferred currency to that beneficiary.
Types of Multi-Currency Accounts
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