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An Introduction To The Basics Of Business Insurance

Jul 5, 2008
Business insurance policies come in all manner of shapes and sizes granting owners with different forms of cover from liability to earthquakes. But as a business owner what are the insurance policy basics that will ensure your company is covered?

General liability insurance is one of the most important types of cover that any business can have. Fundamentally it ensures that the company is covered if any accidents or injuries occur on the premises, or if any of the company products harm or injure anyone in any way. You must be careful with this type of cover, the clue is in the title; as a general insurance policy most contracts will be riddled with exclusions that enable the insurance company to hold payment if the injury or accident was caused due to an error in safety procedures or faulty workmanship. As with most things in business, it pays to read the small print.

Business owners should strongly consider the need for property insurance. Most policies cover properties in the general sense from all manner of occurrences. In the past this was normally based on a named peril system although this is now being surpassed by more general policies. It is still important however to check the details of the cover and understand exactly what occurrences are covered should your property be damaged. If the cover does not have any specific perils that you expect may be probable then it is usually possible to add this to your policy. Not as much a problem in this country, but occurrences such as earthquakes and landslides can be deemed as additional coverage options, if your business premises are located in a flood plain though, having flood cover is probably advisable.

In a world where lawsuit and counter-lawsuit are increasingly becoming a part of the legal process it is important to have some form of worker compensation cover in your policy. Most countries now actually demand this by law creating a situation where owners are liable for injury on the business premises. While during the early stages of your insurance period this will most likely be charged for a blanket fee, if your workspace encounters many accidents the rates for this form of coverage are likely to change.

For those in a business where vehicles such as vans are cars are used extensively it is important to have automobile coverage. Commercial vehicles have a particularly complicated system of liability; even if an employee is driving their own vehicle for business purposes an accident can mean the company is liable. The same can be said if the company vehicle is being used for trips to and from home. In addition company vehicles usually have excessive amounts of equipment stored in them meaning that theft and damage can be a problem.

As well as these basics there are certain inclusions that are advisable for business owners. One of these is to have discrimination liability cover. This is particularly important in either racial discrimination or sexual harassment cases. Normally this type of cover will not be included in general liability coverage. Insurance for specialist equipment on a case to case basis can also be advisable; machinery can be expensive and in many companies is essential to operations. Having cover that will pay for either repair or replacement can be extremely useful.

Hopefully this article has given business owners and idea of the types of cover that are advisable for companies. Ultimately the purpose of cover is to protect your company from any unforeseen circumstances that may harm operations and profitability. It may be an added expense, but it is an expense worth paying.
About the Author
Finance expert Thomas Pretty looks into the different types of business insurance and how they can help cover a company from unforeseen circumstances.
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