10 Types of Insurance Coverage Every Small Business Should Have

As a small business owner you are vulnerable to losses if you lack proper insurance coverage. Consequently, there are 10 types of insurance coverage every small business should have.

1. General Liability
Every business, even home-based operations, requires general liability coverage.  If your product or service causes damage to a third party, general liability covers your defense costs and damages if awarded for bodily injury or property damage.

2. Property Insurance
If your business has personal property like inventory, tools, or computers then property insurance covers for theft, fire, and other losses. You should also consider adding to this policy, loss of earnings/business interruption coverage in case you are unable to operate during a loss.

3. Commercial Vehicle Insurance
A Houston commercial insurance policy will cover tools, inventory, etc., which are being transported as well as covering for damages and collisions. Note: personal auto insurance will not cover items being transported for business purposes.

4. Worker’s Compensation
If you have employees, worker’s compensation insurance is the law.  More importantly, proper coverage protects you and your personal assets if an employee is injured on the job.  This insurance covers medical costs and wage loss for the employee, and waives the employee’s right to sue your business if a loss occurs when they accept these benefits.   

5. Errors and Omissions
Also known as professional liability insurance, this type of policy covers your defense and any awarded damages in the event that you fail to render your services, or inadequately perform them.  General liability does not cover this type of loss, so if your business provides a service it is very important to consider this policy.

6. Data Breach Insurance
In today’s technologically advanced world, data breaches can and do occur.  If you store personal or non-public information about your clients or employees on your computer systems or paper filing systems and the information gets into the wrong hands, this coverage will protect your business from the losses that may follow.

7. Life Insurance
As a business owner with financial obligations, life insurance provides you with peace of mind knowing your family will be protected against financial burden in the event of your passing.

8. Home Owner’s/Renter’s Policy
This coverage protects against losses for physical property damage, contents and personal injury within the premises.

9. Directors and Officers Insurance
If a lawsuit is filed against a director or officer of your business, due directly to their actions related to your business, this coverage will protect against defense costs and damages.

10. Personal Umbrella Insurance
Additional coverage may be purchased in the event your liability insurances are exceeded during a loss.  Depending on the nature of your business, this can prove invaluable in a loss situation. Call ABM Insurance at 800-362-2809 to discuss your insurance requirements and get a free quote on a policy bundle that will protect you and your business.

General Insurance: 7 Basic Tenets

Insurance contracts are an exchange of risk. In return for the premium payment, the insurance company promises to compensate the insured for a loss to person or property. By pooling small payments from many customers, the insurer can extend large amounts of coverage. To make sure both parties are treated fairly and can trust the transaction, the industry has seven basic tenets of general insurance.

1.  Principle of Uberrimae fidei (Utmost Good Faith):  Both sides, the insured and the insurer, must act with good faith. Each party must give honest information and make thorough disclosures.

2. Principle of Insurable Interest:  The person seeking to benefit from the insurance must have sufficient ownership in the object, property, or interest being insured. For example, you can't take out insurance on your neighbor's house unless you own it.

3. Principle of Indemnity:  The insurer agrees, within the limits of the scope of coverage, to cover the loss. In short, the insurance company promises to "make good the loss" and restore the insured to where they were before the claim.

4. Principle of Contribution:  The insured can only recover for actual losses, even if the loss is less than the limit of coverage. If there are multiple policies, the insured can't double or triple dip. You can't make a claim for the same loss to two different insurers.

5. Principle of Subrogation:  When the insured is paid for a loss resulting from the fault of another, the insurance company has the right to seek legal recourse from that person. In short, if your car is totaled by a drunk driver and the insurance company pays your $10,000, then the insurer has the right to sue the negligent driver to recover the costs of the claim.

6. Principle of Loss Minimization:  The insured has a duty to reduce the chance of loss and to mitigate the loss. If your house catches on fire, you have a duty to call the fire department. After a loss, you have a duty, if possible, to secure the property and prevent further damage.

7. Principle of Causa Proxima (Nearest Cause):  If there is loss because of more than one reason, the insurer must look at the damage caused by the closest factor when paying the claim. For example, your street is flooded during a storm. Your house suffers only minor water damage, but catches fire because of downed power lines. You are insured for fire, but not for flood. The insured must pay the claim because you are insured for the closest or proximate cause of the damage.

The seven general tenets of insurance, at its base, is a code of ethics for both parties to the insurance contract. Any questions? Call ABM Insurance & Benefit Services, Inc. at 800-362-2809 today to review and discuss Houston business insurance or other types of insurance.