Commercial insurance is an important part of protecting your business as it grows. We already told you about Directors and Officers insurance in our blog post, Are Your Directors and Officers at Risk?; however, there are several categories of insurance for your company in addition to D&O insurance that you should familiarize yourself with. This post covers several common types of insurance that you may consider for your startup, but for more expert advice on insurance coverage you should consult your attorney or another trusted advisor—they will typically know insurance brokers who work with similar companies and are familiar with the insurance marketplaces.
- Commercial General Liability Policy: This is an insurance policy that protects businesses against liability claims for property damage, bodily injury and advertising injury claims.
- Property damage coverage applies to any damage done by you or an employee to someone else’s property, including your work space.
- Bodily injury coverage applies to claims that your business caused physical harm to a third party, i.e., a customer or visitor, and that person’s medical costs are also usually included in this coverage.
- Property Insurance: This insurance covers your company’s physical assets should they be lost or damaged. Your policy can include property like equipment, computers, furniture, buildings, inventory, and virtual records.
- This type of insurance usually also covers repair or replacement of covered assets in natural and manmade disasters.
- Some property insurance policies may also cover unexpected business disruptions and may help you fulfill financial obligations in the face of lost income as a result of such a disruption.
- Workers’ Compensation Insurance: This insurance policy covers injuries sustained by your employees on the job, including their medical treatment, and may also cover lost wages if the the employee is unable to work as a result of the injury.
- This type of insurance is required by law in many states.
- Generally you need it as soon as you hire full time or part time employees.
- Errors and Omissions Liability: This insurance helps protect service- and professional advice-providing persons, as well as companies, from covering the full cost of any negligence claims made by customers themselves. It can also help cover particular damages awarded in civil lawsuits.
- This type of insurance focuses on alleged error or omission in the service provided by the company that resulted in financial loss to the customer (and these types of claims are not covered by CGL policies). For example, a customer complains that you didn’t back up her photos and now they’ve been lost.
- Cyber/Network Liability: This is sometimes added onto an E&O policy as liability coverage for exposure resulting from your company’s network going down, or private information being leaked or stolen and causing financial damage to your customers.
As mentioned above, your attorney, advisor, or insurance broker can help you navigate which types of insurance you need—the kinds of insurance that are required or advisable vary based on what kind of business you are, where you are located, and what stage your business is in. Seek guidance to properly protect your company!