Are there Different Types of Business Insurance?

Many business owners are familiar with general liability business insurance. It usually comprises of the three basic types of coverage useful to protecting any type of business against the risks most commonly faced. These risks include injuries or illnesses sustained by employees or customers on the business property, risks to damage or destruction to business property and risks of facing lawsuits.

Going Beyond Basic Coverage

There arespecialized forms of business insurance, too, however. These special forms will help insure certain businesses against risks they face over and above the typical coverage found in general or commercial liability business insurance policies. For instance, if your company is a professional firm offering services to clients in the way of offering advice relating to finances or other personal, sensitive matters your company may want to have errors and omissions insurance, too.

This type of coverage will insure your firm against advice given on a professional level to a client. If certain advice is either mistaken or accidentally left out and this leads to damages to the client, the client could sue your firm. Errors and omissions coverage would protect your firm against certain legal costs or help to provide defense costs in the event of a lawsuit going through. This type of coverage is also known, for medical practices, as malpractice insurance.

Other types of businesses that might find errors and omissions coverage useful may include contractors, construction workers and plumbers. This type of coverage might also be also referred to as professional liability insurance. Whichever manner in which this type of insurance is referred to, it is not automatically included in a general liability business insurance plan.

You could be an accounting firm owner and only have a general liability business insurance policy, but you probably would not want to settle for just this basic type of coverage. This is because your clients are utilizing your services to plan their finances or most importantly, file accurate tax returns. If your advice or services, or the advice of someone within your firm fails to provide a client with accurate information or guidance it could result in your client facing serious consequences with the IRS.

This would allow that client to seek damages from your firm, if your firm failed to provide proper advice and counsel, even if the failure to provide this information was accidental. This could lead to a long, drawn out and very costly lawsuit. When you have errors and omissions insurance in place, it helps to keep your firm safe from such a situation especially in the event of an unintentional error which leads to your client's damages.

The Need for Different Insurance

There is another form of coverage called directors and officer's liability insurance. This type of coverage is meant to protect firms made up of shareholders or directors acting in similar capacity against the wrongdoing of one director that leads to a lawsuit against the entire company. The other directors would be protected from the impact or resulting damages from the director having committed the wrongdoing.

This could essentially save a company from serious trouble. However, if you are a sole proprietorship your company may not need any such type of coverage. This is why it is important to discuss any need for additional, different types of business insurance with your broker or agent. If your company structure changes as it grow, different forms may be applicable to the firm to keep it safe and operating as smoothly and efficiently as possible.

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