Entrepreneurship: Types of business insurance

Emeh Joy
By Emeh Joy

Basic Medical Scientist, Freelance Health Writer, Lifestyle Blogger and Business Enthusiast

Entrepreneurship: Types of business insurance

Just as there are different forms and types of businesses, there are different types of business insurance.

Entrepreneurs are risk-takers, and with risk-taking comes pros and cons. Let's talk reality; being an entrepreneur, especially in a country like Nigeria, can be daunting.

When growing a business start-up, you will have to get through different processes such as getting business ideas, getting your business registered, sourcing for funds, employing the right people; it can be overwhelming.

Starting your own business can be scary, too, with lots of risks lying in your path. It becomes worse when you find out that many do not believe in you or your business idea or your business's abilities to thrive.

As a businessman, whether in Nigeria or any part of the world, you must get your business covered under insurance to help you in cases of unforeseen loss or damage.

What are the different types of business insurance?

The different types of business insurance include the following:

1. General liability insurance
2. Business property insurance
3. Professional liability insurance
4. Workers compensation insurance
5. Business interruption insurance
6. Employment practices liability

It would be best if you learned the strategies for business development and, most importantly, get insurance coverage to mitigate risks and possible losses.

You will find out some of these strategies and why insurance would be ideal for your business as you read on.

This article also talks about the different types of business insurance one can get for different risk mitigations.

What is business insurance?

Business insurance is the type of insurance that protects businesses from losses that might occur while running the business.

Many times, people lose their businesses to disasters like fire outbreaks, flooding, building collapse damage and many others.

Some lose a substantial amount of money to robbers, while there are cases of companies who have had it rough due to lawsuits.

The scenarios painted are reasons why there are different types of business insurance available to meet the needs of all business types.

Most times, we hear people say that these things rarely happen, and as such, they do not need to ensure their business assets.

Well, sometimes, it can go all rosy for you, but life brings unprecedented events that will take you off your feet and, most likely, of the business world.

We have seen many who ended up getting hit by one of those such damages, and because they haven't subscribed for the right type of business insurance for their business, they find it really difficult to get back on their feet.

Types of business insurance

Well, a lot of the convincing, now let's looks at the various types of business insurance, the nature of the insurance, what and what, not they cover, requirements, legal practices, suitability, and so much more.

1. General Liability Insurance

Every business needs this type of insurance. This type of business insurance protects your business from losses resulting from damage to a third party's property.

There are different types of business insurance that protects your business against risks and legal actions from third parties

This type of business insurance protects your company's assets. Should your company face charges from a third party (a customer or employee, for instance) because of damage incurred while on your property or while using your product, this type of business insurance will cover your business?

It also covers slander, copyright violations, and libel and protects your personal assets from competitors and customers.

2. Business property insurance

This is one of the common types of business insurance. This type of insurance policy ensures that you do not lose your business properties.

If you own the building where you run your business, or you leased your business property, it would be a smart move to have property coverage.

This type of business insurance covers not just the building but your personal property, furniture, computers and other assets relevant for the daily running of your business.

3. Professional liability insurance

This type of business insurance is also referred to as "Errors and Omissions Insurance". Professional liability insurance covers third-party claims resulting from business negligence.

This type of business insurance applies mostly to businesses that offer professional services such as accounting firms, law firms, consulting firms etc.

4. Workers compensation insurance

Workers compensation insurance is among the types of business insurance.

This type of business insurance is ideal for a business that employs many employees and one whose nature is dangerous such as production companies.

This business insurance type will cover employee injury in case an injury occurs while working.

Workers compensation insurance saves the cost that would have been incurred for their medical bills. It will also cover the cost of losses due to their absence from work during their period of recovery.

5. Business interruption insurance

Business interruption insurance is a type of business insurance that offers protection to you and your business and saves it from going under in the face of a catastrophic event.

Your business might face a terrible situation that will interrupt the normal functioning and put business operations on hold for days. During such time, Your company will most likely experience low revenue.

You will experience losses, but with business interruption insurance, you will be compensated for the damages.

6. Employment practices liability

When we talk of different types of business insurance, employment practices liability makes it to the list.

It is not unheard of for employees of known reputable companies to come out and lay damaging claims on the company. Such claims are detrimental to a company brand and can cause business losses. This type of business insurance policy covers such.

Employment practices liability is a type of business insurance that offers coverage to your business from discrimination, claims of harassment, wrongful termination and other forms of claims employees might make against the company.

How do you get business insurance in Nigeria?

If you are in Nigeria, you will likely ask next is how to get business insurance in Nigeria. It's not that hard. Here are tips on how to get business insurance in Nigeria

Types of business insurance: Is your company covered?

Assess your business and associated risk

It would be best if you put your business into consideration when choosing a business insurance policy. Think about the nature of the company, the kind of accidents that can occur or the natural disasters it is prone to.

Also, is your business at risk of getting lawsuits? You should think about these and more when deciding on the type of business insurance to opt for.

Choose the type of business insurance you need

There are different types and forms of business. What is your own business structure? When registering your business with a corporation like C.A.C, you get certain protections from choosing a business structure like LLC.

However, the scope of that protection is still limited. The insurance policy will fill the gap and ensures that your assets and business is safe.

We already listed the types of business insurance you can opt for to safeguard your business above.

Search for a reputable, licensed insurance agent

Insurance agents get their commission from insurance companies and can help you find the ideal business insurance policies for your business.

Because these agents receive a commission when they successfully sell policies, you should be careful so you don't land yourself one that is only interested in their self-interest.

Take your time to find a licensed agent that would be interested in meeting your needs as much as they want to meet theirs.

Feel free to compare prices

Besides getting a reputable licensed insurance agent, you should also be interested in getting the best value for your money. Go ahead and compare the prices of different business insurance companies.

However, you should know that benefits might vary significantly with prices; thus, you should run comparisons on the terms, rates, and benefits for insurance offers.

Takeaway

Sadly, many entrepreneurs fail to get business insurance coverage for their businesses. Two of the primary reason for this is ignorance and lack of trust in the insurance industry.

Perhaps if you understand how an insurance policy works, you'll see more reasons why you should get an insurance policy for your business. Businesses should not be left vulnerable to risks without some compensation coverage.

Read up on this article to learn the different types of business insurance and have your business covered!