General Liability Insurance

General Liability Insurance (GLI) is a cornerstone of most business insurance portfolios. GLI protects businesses against claims of bodily injuries, property damage, and associated medical costs that can occur on company property or as a result of business operations. This insurance is essential for businesses of all sizes since anyone who steps onto the business’s premises or is affected by its products could file a lawsuit.

To determine how much GLI a business needs, one should consider the level of risk associated with the business’s operations. A brick-and-mortar store with heavy foot traffic, for instance, is at greater risk of customer injury and might need a higher coverage limit than a small consulting firm with no physical client-facing location. Additionally, businesses in certain industries may require specialized liability insurance that offers additional protections against industry-specific risks.

Professional Liability Insurance

Professional Liability Insurance, or Errors and Omissions (E&O) Insurance, safeguards businesses against claims of negligence, misrepresentation, violation of good faith and fair dealing, and inaccurate advice. This form of insurance is particularly critical for companies that provide professional services or advice. Healthcare providers, lawyers, accountants, consultants, and real estate agents are among those who significantly benefit from this insurance.

The amount of E&O insurance needed generally corresponds to the size of a business’s client base, the scope of its services, and the potentially costly nature of a professional mistake. Industries with high litigation rates may require higher coverage limits. Evaluating historical claims in the industry can also inform how much coverage is prudent to carry.

Property Insurance

Property Insurance protects a business’s physical assets — buildings, equipment, inventory, and furniture — against damage or loss due to events like fire, storm, or theft. The cost of replacing these assets can be significant, and without adequate coverage, a business might not recover from a disaster.

To determine the right amount of property insurance, a business should assess the total value of all its physical assets. Acquiring replacement cost coverage, which reimburses the business the amount it would take to buy new items at current prices, as opposed to actual cash value coverage, which factors in depreciation, is usually recommended. The geographic location and the propensity for natural disasters can increase the need for higher coverage.

Workers’ Compensation Insurance

Workers’ Compensation Insurance is mandatory in most states and covers employees who suffer work-related injuries or illnesses. This insurance provides wage replacement and medical benefits to those injured in the course of employment in exchange for mandatory relinquishment of the employee’s right to sue their employer.

The amount of coverage needed for workers’ compensation is determined by several factors, including the number of employees, the type of work done, and the company’s claims history. Different jobs have different risk levels, with some manual, labor-intensive industries carrying higher injury risks than office-based jobs.

Business Interruption Insurance

Business Interruption Insurance covers the loss of income that a business suffers after a disaster while its facility is either closed due to the disaster or in the process of being rebuilt following a disaster. It’s a component of a business’s property insurance policy or a comprehensive package policy such as a Business Owner’s Policy (BOP).

Businesses that rely heavily on physical locations for sales and service should strongly consider this insurance. The amount of coverage should be sufficient to cover the loss of income and operating expenses for the duration one can expect to be out of action, potentially including the costs of setting up a temporary location.

Commercial Auto Insurance

Commercial Auto Insurance protects a business’s vehicles which carry employees, products, or equipment. With commercial auto insurance, businesses can insure their work cars, SUVs, vans, and trucks from damage and collisions. If employees drive their own cars for business purposes, non-owned auto liability insurance can be necessary to protect the company in case the employee does not have insurance or has inadequate coverage.

The amount of commercial auto insurance needed depends on the number of vehicles a business owns and their use. A business should ensure it has at least the minimum amount of coverage required by law, together with sufficient liability coverage to protect its assets in the event of a serious accident.

Product Liability Insurance

Product Liability Insurance protects businesses against claims that a product they made or sold is unsafe and caused injury or damage. Companies involved in manufacturing, distributing, or retailing physical products should consider product liability insurance.

The required amount of product liability insurance is based on the type of product, its use, and the potential for it to cause harm. A business that manufactures heavy machinery may have a higher risk and thus require more coverage than a business selling apparel, for instance.

Cyber Liability Insurance

In the current digital era, Cyber Liability Insurance is crucial due to the escalating risk of cyber threats. This insurance protects businesses against damages arising from electronic threats, such as data breaches, cyber-attacks, and other technology-based risks.

To determine the amount of cyber liability coverage required, a business should evaluate the type and volume of data it handles, particularly sensitive information like customer personal details or credit card numbers. Companies in the healthcare and financial services industries often need higher levels of coverage due to the nature of the data they handle and regulatory requirements.

Key Person Insurance

Key Person Insurance is a life insurance policy that a company purchases on a key executive’s life. The company is the beneficiary and the aim is to help the company recover from the loss of a key person who makes a significant contribution to the business’s success.

The amount of key person insurance needed is correlated with the individual’s contribution to the company. It should be enough to cover the cost of replacing the key person’s knowledge, relationships, or sales, as well as any potential revenue loss.

Employment Practices Liability Insurance

Employment Practices Liability Insurance (EPLI) provides protection to businesses against claims of discrimination, wrongful termination, harassment, and other employment-related issues. Companies with employees should consider EPLI because even with strict protocols and policies, lawsuits can occur.

To figure out the amount of EPLI coverage a business needs, the business should consider its history of employment disputes, the effectiveness of current workplace policies, and employment practices. Additionally, industries with higher turnover rates might have a greater need for EPLI.

Directors and Officers Insurance

Lastly, Directors and Officers Insurance (D&O) protects the personal assets of corporate directors and officers, and their spouses, in the event they are sued by employees, vendors, competitors, investors, customers, or other parties, for actual or alleged wrongful acts in managing a company.

The amount of D&O insurance required depends on the company’s size and exposure level. Startups and publicly traded companies typically have different coverage needs. The policy should be sufficient to cover defense costs as well as damages or settlements.