Insurance can be complicated and confusing, especially if you run your own business. It becomes much easier to understand when you break it down into different types, terms and the basics. Here is everything you need to know about insurance for both your business and your life.
The Basics Of Insurance
Although different types of insurance work in different ways, the basic principles of how insurance works remain the same. Policyholders pay regular premiums to an insurance company in exchange for coverage with the purpose of protecting the policyholder from financial, personal or other types of loss, typically during a catastrophic event. Common terms to know include:
- Premium: The amount you pay every month to keep your coverage.
- Deductible: The amount you agree to pay out of pocket before your insurance begins paying.
- Claim: When you request payment from your insurance company after an incident.
- Limit: The maximum coverage or payment amount.
Some types of insurance are legally required for business owners while others are simply a good idea to have. Others, such as car insurance, are required for both personal and business purposes.
The types of insurance you hold in your personal life are mostly different from the types of coverage you should have for your business. Here are the types of insurance most individuals have and why they are important.
Health insurance is necessary to cover your medical bills if you need emergency care, such as after an accident or if you develop a chronic medical condition that will be costly to treat. It is also useful to monitor and care for your physical and mental health on a regular basis. Most people receive it through their jobs but if you own your own business you are responsible for getting health coverage for yourself and your family. The Affordable Care Act made navigating health insurance easier on small business owners but it can still be confusing and frustrating. Separate types of health-related insurance include dental and vision insurance.
Whether you own a home or rent, you are likely required to carry insurance that covers your dwelling in the case of a disaster. Homeowners insurance is required by most mortgage companies and renters insurance is often required by landlords. These types of insurance, offered by Bear River Insurance Utah and others, protect you against liability if a guest is injured at your home, cover your losses if your residence is destroyed in a fire and can pay to fix damaged structures like a roof. These policies also pay for meals out and hotel stays if your dwelling is temporarily uninhabitable.
Other Types Of Personal Insurance
Individuals who own boats or other expensive items can purchase insurance coverage to protect their investments against destruction or damage. Collectors frequently purchase insurance to cover their collections, such as coins, firearms or books, in case of loss or theft. You may also want to purchase additional coverage for events standard insurance doesn't cover, such as flood insurance.
Aside from your personal insurance needs, your small business needs a variety of coverage types too. Some of these are legally required by most states while others are simply good business sense.
This type of insurance protects your business against liability from lawsuits and other claims. These can include suits from customers who have been injured at your place of business, suits from other companies alleging you stole their intellectual property, suits regarding employee issues and more. Business liability insurance typically covers court fees and payouts if your company is ruled against.
Workers Compensation Insurance
Workers compensation insurance covers the cost of care for employees who are injured at work. Nearly all states require most employers to carry workers compensation insurance by law. Because employer responsibilities vary so significantly by state, it is important for small business owners to check with their state to understand their obligations based on their specific situation.
Other Types Of Business Insurance
There are many, many different types of business insurance and the policies you carry will entirely depend on your needs and what your business does. For example, errors and omissions insurance is a specialized type of liability insurance used in professional service industries such as financial advising or law. It protects companies and individuals from liability due to innocent mistakes. Your business may also need commercial auto insurance, property insurance, data breach insurance and more.
Remember, you don't have to navigate the insurance world alone. If you find yourself lost, you can contact an insurance agent for advice about the best coverage for your needs. Understanding how insurance works and maintaining comprehensive coverage can offer you significant protection in the event of an unfortunate incident.