Understanding Business Insurance Policies: Key Terms and Definitions

Protection from internal and external risks while running a business is extremely important and can make or break your company, especially if you don’t have the correct cover. 

To ensure you have the right coverage, you need to understand key terms and definitions of business insurance policies and see what is most relevant to you and your company.

Common Types of Business Insurance

1. General Liability Insurance

This type of insurance would be relevant for multiple types of companies, whether it be warehouse workers or office workers, there is always the risk of something happening in the workplace that might cause bodily injury. This also covers property damage to a certain degree, such as broken windows and so forth. This is good all-round protection from small workplaces that keeps them covered to the necessary standard.

2. Property Insurance

This type of insurance covers threats to your business property, including buildings and equipment. Theft is a huge issue for many businesses, especially when there are thousands of pounds worth of tech and equipment. It becomes more than essential to protect your assets, as it would be a more costly issue if you were unable to continue with your work.

3. Workers Compensation Insurance

This type of policy covers any medical expenses and lost wages for employees injured on the job. It can be hard for a business to pay for all of these things while having to pay to replace that member of staff. This type of issue can be very costly, especially for small businesses; therefore, it can be a business lifesaver for those where injury risks are more likely than others, such as construction companies and so forth.

4. Product Liability Insurance

If you are a business that sells products on both a large and smaller scale, it would be beneficial to have product liability insurance. More so if mass products are being created, it makes it harder to quality assure each and every product so defects are more common than what you would find in a small-owned product business. Therefore, this type of policy may be more relevant for those larger companies.

5. Professional Liability Insurance

When a company works B2B, whether they are a business looking for a service or product from another company, this policy covers any claims of negligence and professional misconduct. This could be that the company you are working with isn’t satisfied with the service you have provided or is unhappy with the supplies that have been delivered. There are just qualms with both sides and this strain on the business can be lengthy, stressful and costly. Having this insurance policy in place ensures that you don’t have to pay for or deal with it.

6. Cyber Insurance

This is more than essential for businesses that rely on technology, which is pretty much all types of companies. Sensitive information is usually always stored on our phones, laptops and computers, so it becomes imperative that insurance and other forms of cyber protection are in place to guarantee that ever in the case information is stolen from you, you have the necessary means to rebuild the security of your business.

7. Shareholder Protection

When we start a company with a business partner or partners, it’s hard to predict what the future holds for both the company and those individuals who have a large say in how everything moves forward. Shareholder protection essentially protects a company's past, present and future from shares being passed on to their next of kin in the will. 

The next of kin could be anyone who might not know anything about the company so it puts the rest of the shareholders and the company in an awkward and potentially threatening situation. Therefore, this type of policy allows a payout to let the remaining shareholders buy them out.

8.  Key Man Insurance

A key man insurance policy is the protection of the key people within your company. For example, if you rely heavily on a director or a skilled individual who is not so easy to find, this can place your company at a lot of risk. 

While it’s not desirable to think that they might fall under some critical illness or even die suddenly, unfortunately, life can happen that way. This, therefore, gives your company some money so they are able to function while taking the time to grieve and find someone to replace that key person.

9.  Company Life Insurance

It goes without saying that, as a business owner, you will be looking for corporate life insurance that offers income and corporation tax relief, as well as what kind of coverage is available. If that describes you, then read on for an overview of the many policies you should take into account and details on how this business life insurance may safeguard not only your company but also you and your employees personally.

10.  Private Health

Your family may also be covered by private business health insurance, which is tax deductible and can be paid for by your company as an expense. There is corporation tax relief available, but the cost of the business health insurance premiums will be subject to a benefit-in-kind tax. Typically, this is more tax-efficient.

Conclusion

When it comes to picking the right business insurance, it’s key to know that you can combine them to ensure that you have complete coverage. Deciding if a policy is worth it is completely down to you and how large your business is. 

It’s recommended that you shop around for different policies from different firms and see where you can find the most competitive price. I would also recommend you read all of the terms and conditions, as you may think you are covered for something but the fine print finds a way out of paying. Picking a reputable company you can rely on to hold up their end of the bargain is very key. 

By understanding these key terms and concepts, you can make informed decisions about your business and protect your company from potential risks and threats that you might not have even considered as a threat in the first place.