Business Insurance FAQs
Business insurance is a collection of coverages designed to protect your business from various risks, such as property damage, liability claims, employee injuries, and more. It helps protect your assets, minimize financial losses, and ensure business continuity in the event of unforeseen circumstances.
Common types of business insurance include:
- General Liability Insurance: Protects against claims of bodily injury and property damage.
- Professional Liability Insurance (Errors & Omissions): Covers claims of negligence or mistakes in providing professional services.
- Commercial Property Insurance: Covers damage to your business property, such as buildings and equipment.
- Business Interruption Insurance: Covers lost income and expenses if your business is temporarily shut down due to a covered event.
- Workers’ Compensation Insurance: Covers employee injuries and illnesses related to the workplace.
- Commercial Auto Insurance: Covers vehicles used for business purposes.
- Cyber Liability Insurance: Protects against data breaches and other cyber risks.
Some types of insurance, such as workers' compensation and commercial auto insurance, are required by law in most states. Other coverages, like general liability or property insurance, are not legally required but are highly recommended to protect your business from financial loss.
A BOP bundles general liability insurance and commercial property insurance into a single policy, often at a lower cost than purchasing them separately. It’s a great option for small to medium-sized businesses looking for broad coverage.
The cost of business insurance depends on various factors, including the size of your business, industry, location, and coverage needs. Customizing a policy to fit your unique business risks will help ensure you get the right coverage at a competitive price.
Yes, as your business evolves, you can update your insurance coverage to match your new risks and needs. Whether you’re expanding locations, hiring more employees, or investing in new equipment, your policy should be adjusted accordingly.
Cyber Liability Insurance FAQs
Cyber liability insurance helps protect your business from financial losses related to data breaches, hacking, ransomware, and other cyberattacks. It covers the costs associated with responding to and recovering from these incidents, such as legal fees, notification costs, and more.
If your business stores sensitive customer data (like personal, financial, or health information) or conducts business online, you’re at risk of cyberattacks. Cyber liability insurance helps mitigate the financial impact of data breaches, ensuring your business can recover without significant losses.
Cyber liability insurance typically covers data breach response (customer notifications, credit monitoring), legal fees, business interruption due to a cyberattack, ransomware recovery, and forensic investigations to identify the breach source.
Yes, most cyber liability policies cover ransomware attacks, including the costs to recover data, pay extortion demands, and address business interruption caused by such attacks.
Yes, small businesses are increasingly targeted by cybercriminals because they often lack the robust security infrastructure of larger companies. Cyber liability insurance is crucial for businesses of all sizes to mitigate the financial impact of an attack.
Surety Bonds FAQs
A surety bond is a contract among three parties—the principal (your business), the obligee (the party requiring the bond, usually a government or client), and the surety (the insurance company). It guarantees that your business will fulfill its obligations, such as completing a project or complying with regulations. Many industries require surety bonds for licensing or contract work.
Common types of surety bonds include:
- Contract Bonds: Guarantee performance on construction projects.
- License & Permit Bonds: Required for businesses to obtain certain licenses.
- Court Bonds: Ensure compliance with court rulings.
- Fidelity Bonds: Protect against employee theft or fraud.
Unlike insurance, a surety bond protects the obligee (the party requesting the bond), not the business buying it. If your business fails to meet its obligations, the surety may cover the financial loss, but you’re ultimately responsible for reimbursing the surety.
Businesses in construction, contracting, and other regulated industries often need surety bonds to comply with legal requirements or secure contracts. If your industry requires bonds for licensing or projects, you'll need one to operate legally or competitively.
The cost of a surety bond is a percentage of the total bond amount, usually ranging from 1% to 15%, depending on the type of bond, the size of the bond, and your business's creditworthiness.
If a claim is made, the surety company may cover the damages on your behalf, but you’re required to reimburse the surety for the amount paid. Failing to fulfill your obligations can result in financial and legal consequences.
General Liability Insurance FAQs
General liability insurance covers bodily injury, property damage, personal injury, and advertising injury claims that your business may be legally responsible for.
Yes, even small businesses need general liability insurance to protect against legal claims related to accidents, injuries, or property damage caused by business operations.
While not typically required by law, many clients or landlords may require proof of general liability insurance before working with you.
The amount of coverage depends on the size, industry, and risk level of your business. A professional consultation can help determine the appropriate coverage.
No, employee injuries are not covered by general liability insurance. Workers’ compensation insurance is required to cover employee injuries.
Contractor Insurance FAQs
Contractors typically need general liability, workers’ compensation, commercial auto, and professional liability insurance. Additionally, tools and equipment insurance may be essential.
Subcontractors generally need their own insurance policies, but you can require proof of coverage before hiring them to avoid liability.
Professional liability insurance (errors & omissions) would help cover legal fees and any settlements related to a client suing you for faulty or incomplete work.
Yes, even small or part-time contractors need insurance to protect against accidents, property damage, or legal claims that could arise from any job.
Yes, you can add tools and equipment insurance to cover the cost of repair or replacement if your tools are lost, stolen, or damaged.
Professional Liability (Errors & Omissions) FAQs
Professional liability insurance, also known as errors & omissions (E&O), covers legal claims against your business for negligence, mistakes, or failure to provide services as promised.
Any business providing professional services or advice, such as consultants, architects, lawyers, and contractors, should have professional liability insurance.
Yes, professional liability insurance covers legal fees and any settlements or judgments from covered claims.
No, intentional acts or fraudulent activities are not covered by professional liability insurance.
It is not legally required in most cases, but many clients or industries require it to enter into contracts.
Business Property Insurance FAQs
Business property insurance covers physical assets like buildings, equipment, inventory, and furniture from risks such as fire, theft, and certain natural disasters.
It may cover some natural disasters, but coverage for events like floods or earthquakes often requires additional endorsements.
Coverage should be enough to replace all physical assets in case of a major disaster. A proper assessment of your business’s assets will help determine this.
No, business interruption insurance would cover lost income. This can often be bundled with business property insurance.
Business property insurance typically covers your contents and assets, but not the building itself unless you own it. Rented spaces may also be covered under the landlord’s policy.
Business Interruption Insurance FAQs
Business interruption insurance covers lost income and ongoing operating expenses if your business is forced to close temporarily due to a covered peril, such as a fire or natural disaster.
Most policies do not cover losses due to pandemics, including COVID-19. It’s essential to review your specific policy for details.
Coverage typically lasts until your business can resume operations or until the policy’s time limits are reached, usually around 12 months.
Yes, it generally covers fixed operating expenses such as rent, utilities, and payroll during the interruption period.
No, it is not usually included and must be added as an endorsement or bundled with a Business Owner’s Policy (BOP).
Workers’ Compensation Insurance FAQs
Workers’ compensation insurance covers medical expenses, lost wages, and rehabilitation for employees who are injured or become ill on the job. It also protects employers from lawsuits related to workplace injuries.
Yes, most states require businesses with and without employees to carry workers’ compensation insurance. The requirements vary based on the number of employees and the type of work.
Yes, part-time employees are generally covered by workers’ compensation, just like full-time employees.
Premiums are based on your industry, total payroll, and your company’s history of claims.
In certain cases, workers who contract COVID-19 as part of their job duties may be eligible for coverage. It depends on state laws and specific circumstances.
Commercial Auto Insurance FAQs
Commercial auto insurance covers vehicles used for business purposes, including liability for accidents, physical damage to the vehicle, and injuries to passengers or third parties.
Yes, it covers employees driving company-owned vehicles for business purposes. For personal vehicles used for work, you may need non-owned auto insurance.
Yes, commercial auto insurance is typically required by law for vehicles used for business purposes, similar to personal auto insurance requirements.
It may cover rented or leased vehicles used for business, but you may need to add hired and non-owned auto insurance for full protection.
Commercial auto insurance covers business-related risks and typically offers higher liability limits and more specialized coverage options than personal auto insurance.
Disclaimer
The information provided on this website is intended for general informational purposes only and may not apply to your specific business needs, industry, or location. Insurance requirements and regulations vary by state and municipality, and the coverage options discussed may not be available in all areas. We recommend consulting with a licensed insurance professional or agent at Good Fellow Insurance Services to discuss your unique situation and ensure you have the appropriate coverage tailored to your business and compliance with local laws.