Most types of business insurance are optinal. However, depending on state laws where your business is being conducted, may require you to have a specific type of coverage to cover against perils. Do you know these mandatory covers are? Below are four such covers:
1. Professional Liability Insurance (PLI)
Public liability insurance is a cover for professionals against claims by their clients as a result of negligence, misrepresentation, or malpractice. Such professionals include accountants, physicians, and lawyers. Yet, unlike general liability insurance, PLI caters to the specific needs of such professionals.
Note, professional liability insurance is often referred to in other names like medical malpractice insurance and errors and omissions insurance, depending on the industry where it is applicable. This way, the customized PLI cover will cater to all risks that are specific to the sector. Still, a custom PLI cover excludes claims due to criminal prosecutions and cyber liability.
2. Property Insurance
A business startup invests in assets that include physical property susceptible to theft, fire, and other perils. In turn, the business must have property insurance to cushion it from potential losses. A typical property insurance policy will cover such assets as buildings, equipment, and inventory.
Property insurance excludes damage to property due to mass-destruction incidents. Here, the business owner must seek extra covers to cushion against the location-specific risks. Or, you can opt to pay additional premiums for your property insurance to include such localized calamities.
3. Worker’s Compensation Insurance
When an employee suffers an injury or dies while executing his duties, he or his beneficiaries can claim compensation using the worker’s compensation insurance. Here, the cover will pay for his medical expenses, disability, and death expenses, plus compensate for lost wages. In effect, the Worker’s Comp. waives the employer’s right to sue his employees based on the tort of negligence.
Except for businesses in Texas, all companies operating in the US must take up the worker’s compensation coverage for their employees. Still, there is a minimum employee requirement before this cover can apply to one’s business. This minimum employee number varies from state to state.
4. Vehicle Insurance
Finally, companies must have commercial auto insurance for their official fleet of vehicles. Indeed, this policy cushions the employees from losses and damages in the event of an accident. Here, the employee can claim compensation for his injuries, damage to his property or the extent of legal fees incurred.
Often, employees use their private cars while on official duty. Then, it is prudent to get a hired non-owned policy to cover such autos.
Other mandatory insurance for businesses includes business interruption insurance and home-based insurance. Then, small business owners must assess the type of risks they face before consulting with an insurance broker for appropriate covers. Factor in this necessary cost in your forecasts and plan to pay for them accordingly.