Essential Business Insurance Services: A Comprehensive Guide

Most business insurance providers offer four common services; liability insurance, property insurance, employment practices liability insurance, and professional liability insurance.  Each service provides a different level and type of coverage as described in further detail below.

Liability Insurance

This type of insurance covers physical harm, to a third party,  by a company employee. For example, you may have a driver for your catering company who gets into an accident on the way to deliver food to a wedding.  Liability insurance would cover any claims that occur from that accident.  Most insurance brokers and attorneys recommend a minimum of $3 million in liability coverage.

Property Insurance

This type of insurance covers any damage to the business property itself, as well as any financial damages suffered because of an interruption of business from the loss of that property. The amount of coverage needed is usually equal to the cost to replace or rebuild the property plus any extra expenses you might incur, such as additional advertising or leasing costs, or costs to relocate the business temporarily. Property insurance differs from liability insurance in that it covers losses realized by the owner, not a third party.

Employment practices liability

This coverage, also known as EPL, is becoming increasingly popular and represents approximately 10-20% of all suits files against small businesses. This coverage is for certain employment practices and comes in handy when disputes arise around hiring and firing.  Especially cases where the employee feels they were wrongfully terminated, as in sexual, age, or race discrimination cases or cases where the workplace was made to be unbearable for the employee such that they were forced to quit. EPL can also cover the business owner's defense costs, which can sometimes be in the hundreds of thousands of dollars. It can also be setup to cover any judgments or settlements that may arise from the suits.

Professional liability insurance

A less popular insurance service is professional liability insurance, which is for professional service firms and providers. This insurance covers people who are required to obtain special licensing to perform their business functions, like CPA's, attorneys, doctors, psychiatrists and real estate agents.

When choosing the right coverage for your company, a business owner should seek a qualified insurance broker. Brokers work independently and can often supply several competitive quotes and help determine the coverage limits for each service and policy.