General Liability
A BOP includes general liability insurance, which covers property damage, bodily injury, and personal/advertising injury claims. Ultimately, it protects businesses from legal and medical costs if someone is injured on their premises or if their business operations cause damage. This also covers legal defense fees.
Commercial Property
Commercial property insurance protects a company’s physical assets from risks like fire, explosions, storms, theft, and vandalism. However, coverage for earthquakes and floods typically requires an add-on. The cost depends on factors such as the asset value, location, building construction, industry type, and more. This insurance helps businesses recover financially and more quickly from major property damage, ensuring reduced disruption to their operations.
Business Owner’s Policy (BOP)
A BOP bundles essential coverages like property, general liability, and business interruption insurance (also known as business income insurance) into one package, typically at a lower cost than purchasing them separately. This policy is designed for small to medium-sized businesses, and it offers a lot of flexibility with optional add-ons like crime or forgery protection. Note that eligibility will depend on various factors, including location, revenue, industry, etc., so not every business will qualify.
Auto
Commercial auto insurance covers vehicles used for business purposes protecting against accidents, theft, and damage. It includes liability coverage if an employee creates an accident, as well as coverage for physical damage to the business vehicles. Companies relying on delivery services or transportation would benefit most from this policy.
Workers’ Compensation (WC) Insurance
WC insurance provides medical expenses, lost wages, and rehabilitation costs for employees who become ill while on the job or are injured. It also provides death benefits to the families of employees killed in workplace accidents. Required by law in most states, businesses with employees must purchase this insurance. This insurance benefits both employees and employers by ensuring financial protection while minimizing legal complications.
Errors and Omissions (E&O) Insurance / Professional Liability Insurance
E&O Insurance is another name for professional liability insurance, and it protects business from lawsuits if a client were to claim that they suffer financial losses due to mistakes in the business’ professional services. This coverage can help pay for legal fees, settlements, and other costs in case a lawsuit arises. It is especially useful for consultants, medical providers, lawyers, and other service professionals who give advice or offer specialized services. While it may not always be required, having this insurance is important for protection against unexpected legal claims.
Directors and Officers (D&O) Insurance
D&O insurance protects company leaders and their personal assets if they are sued for decisions made while managing the business. It covers legal fees, settlements, and other costs related to claims like breach of fiduciary duty, fraud, or failure to follow workplace laws. D&O insurance is valuable for businesses of all sizes, including nonprofits and startups seeking insurance. In fact, many directors and officers require this coverage before joining their company to protect their personal finances.
Employment Practices Liability Insurance (EPLI)
EPLI protects businesses from employee lawsuits related to discrimination, wrongful termination, and other workplace related issues. The most vulnerable are small businesses since they often lack formal HR policies. EPLI covers legal fees and other costs, and can be added to a BOP or purchased as a standalone plan. Since most policies are claims-made, the coverage only applies if the policy is active when the claim is filled out. To reduce risks in their business, businesses should implement clear policies and properly understand employment laws like the Civil Rights Act and Americans with Disabilities Act.
Captive Insurance
Captive insurance allows businesses to create their own insurance company putting their own capital at risk to insure their unique risks. Unlike mutual insurance companies, captive insurers are wholly owned and controlled by their insureds, who actively manage underwriting and claims. Captive insurance is mostly used by large corporations or industry groups to lower costs and customize policies for their special needs. However, setting up a captive insurer requires a lot of regulatory compliance and financial resources, so is typically not recommended for smaller companies.