What Does Business Insurance Cover?

(Get your questions answered by an expert.)
Written by Ashley Surinak
Written by Ashley Surinak

Insurance doesn’t have to be boring. That’s why we hired Ashley Surinak to be our BA insurance writer. Ashley specializes in making mundane subjects hella-entertaining.

paul martin Reviewed by Paul Martin
paul martin
Reviewed by Paul Martin

Paul Martin is the Director of Education and Development for Myron Steves, one of the largest, most respected insurance wholesalers in the southern U.S.

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What does business insurance cover?
How does business insurance protect property?
How does business insurance protect against operational liability?
How does business insurance protect against products liability?
Expert(s) Found on this Page

What does business insurance cover?

I own a [small/mid-size/large] business and I’m pretty sure I need insurance. But before I go out and buy a policy, or maybe a few policies, what’s going to be covered? I want to know what I’m paying for and why before I do anything.

This is a great question, but it’s a loaded question. Business insurance covers a whole lot of things, but the best way to think about it is that business insurance includes:

  • Property coverage
  • Operational liability
  • Product liability

Put simply: You can lose your stuff and people can sue you. A general liability policy will cover most of that. Depending on your line of business and the scope of risk that comes along with it, a TrustedChoice.com independent insurance agent can help you determine which additional policies you may need to fill in the cracks.

How does business insurance protect property?

OK, so business insurance protects against property damage. Does this mean my building? Or does it mean the stuff inside it? What about each customer’s property that they bring into my business?

These are all valid questions, because property can mean a lot of different things. The short answer to this question is yes. By yes, I mean that business insurance covers all of these things. So if:

  • you own, lease or rent real property (like a building) and suffer a covered loss, property insurance covers that.
  • equipment, inventory, furniture, or fixtures in the building are also lost, property insurance covers that.
  • a customer’s property is damaged at your business, property insurance might even cover that, too.

How does business insurance protect against operational liability?

Now that I know that my stuff is protected, what about all the other risks of running my business? What if people get hurt? Am I covered then?

A general liability business policy covers operational liability. Operational liability just means liability you may have for running your business. If a customer slips and falls on the wet floor in your store, you’re covered. Or if a customer is served rotten food that makes them sick, you’re covered for that.

Keep in mind that not all issues are covered by a general liability policy. The most important exception is liquor liability. If you serve alcohol, an alcohol-related incident isn’t covered by your general liability policy. This is why working with a TrustedChoice.com independent insurance agent is so important – it’s the easiest way to know what you’re missing and where you need additional coverage.

How does business insurance protect against product liability?

You mentioned business insurance also covers product liability. What’s that and how does the coverage work?

If you sell or manufacture products, product liability covers any defects or injuries the products cause. Let’s say you’re a manufacturer and you have a batch of products that doesn’t come out quite right. That defect then causes injuries to your customers and they sue you. Product liability coverage is what you would need in that situation.

Keep in mind that you could be held liable for a manufacturing defect even if you just sell the product and don’t manufacture it. This is just another reason why business insurance is so important.

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