If you are just starting your own business, you will be required by your local business authority to submit certain requirements. It is part of every starting business to complete this stage and there’s nothing else we can do but to follow what the authority is requesting. Among those requirements, business insurance can be one of the most daunting.
However, aside from being a businessman’s responsibility that all his business activities and properties be completely covered by business insurance, having insurance is also an advantage against risks.
In this article, we will discuss what insurance is, what can it do for your business and why do authorities oblige establishments to have at least one.
What is Business Insurance?
Before we start defining, it is important to have a clear understanding what are the types of business risks. Basically, there are two types of risks that organisations may face – business property risks and business liability risks.
All business insurance policies contain elements of the two risks either combined or separated under a single plan. Property insurance cover is what you need for business buildings or premises contents. On the other hand, you will need liability insurance cover if you have to fight against the risks that you may face resulting from your daily transactions.
Types of Business Insurance
Like we said earlier, there are two types of business insurance. Your business can have business property insurance, liability insurance or both. Listed below are the two types of insurance:
A. Property Contents Insurance
This type of business insurance covers loss or damage of any of your furniture, equipment, machineries, building structures, stock, raw materials, inventories and other loss or damage to the contents of the business. However, cargo, freight and products in transit are covered away from the premise.
Usually, business property insurance cover is marketed by the type of business insurance they provide insurance for. Each commercial property has a corresponding insurance scheme which takes in all the relevant covers for each use of the type of property.
B. Liability Insurance
Liabilities are events which occur that could lead to claims against your business enterprise. Thus, main function of this insurance policy is to protect your business from liabilities you may face as you carry out your daily actions. It will protect you company from all damages and costs incurred resulting from the claim.
Public Liability Insurance, Employers Liability, Products Liability, and the Directors and Company Officers Liability are the types of business liability insurance.
Public Liability protects your business against claims from the public. This insurance cover forms the basis of a standard business insurance contract.
Employers Liability will be required from you if you have business employees. It will protect your business against claims resulting from accidents and injuries (while at work) to paid employees and subcontractors.
For businessmen who sell and provide goods, you will need Products Liability Insurance. This insurance is automatically included for retailers and wholesalers.
For some companies, they can also purchase the Directors and Officers Insurance or the D & O to protect the company owners and directors from both criminal and civil liabilities resulting from business activities.
To know which type of business insurance is most suitable for your business, ask for expert consultation from professional accountants nearest you.