The Basics of Business Insurance: Protecting Your Business from Liability, Loss, and Litigation

The Basics of Business Insurance: Protecting Your Business from Liability, Loss, and Litigation


A business should consider purchasing insurance coverage to protect the business from unforeseen liability, loss, and litigation. There are numerous types of insurance policies available to a business, and it is wise to consult an insurance agent or broker about the options of coverage which would apply to your business.

One of the most basic forms of business insurance is Property Insurance. Property Insurance protects the owner of a property against loss resulting from partial or complete destruction of that property. Business Interruption Insurance, along similar lines, protects a business against the loss of earnings in the event that damage to a physical property causes an interruption in business activities.

Workers’ Compensation Insurance allows for the payment of compensation benefits to injured employees. Group Insurance provides health or life insurance to employees as a benefit.

Broad in concept and scope, Liability Insurance generally protects against loss arising out of legal liability caused by negligence, irrespective of whether the business is actually deemed liable for damages. Product Liability Insurance is a specific type of liability insurance which protects a business in the event that an individual sues a manufacturer for injury or damage caused by the product.  Liability Insurance can be a valuable asset for your company since your company can be sued even if it did nothing wrong and you ultimately win your case.  The legal fees alone in defending even non-meritorious cases can destroy a business.

Bonds are yet another category of insurance. Fidelity bonds are concerned with honest practice of employees, and surety bonds guarantee performance of certain obligations by employees.

It is very important for businesses to consider the changes in insurance law caused by the growth of the internet. Any business that reaches customers over the internet is in essence a global business, and may be sued in any territory in which customers of the business are reached. Additionally, businesses that publish information over the internet may be subject to claims of fraud, misrepresentation, defamation, intellectual property infringement, and other such claims associated with media.

Choosing the proper insurance coverage for your business can empower you to conduct operations without worrying about a major liability which could be financially ruinous.  It is highly advisable to seek the help of insurance professionals and legal counsel in choosing insurance that will be right for your business.