Most business owners would agree that it’s important to maintain insurance to protect business assets. When they think about insurance, business owners generally consider protection against hazards such as fire, flood or theft at their company sites. This is obviously an important protection to have. However, there are other types of hazards that may not be quite as high on the list, but protection could be every bit as important to offset significant financial losses.
Here are five examples that underscore the need for comprehensive business insurance protection. For a broader discussion of commercial coverage needs, see Why Commercial Business Insurance is a Must-Have for SMEs.
Less obvious coverages to consider
- Company vehicle contents: If you operate a business with employees on the road making service calls to customers, chances are there is valuable equipment contained in the company vehicles. A typical auto insurance policy would probably not cover the contents of a company vehicle if that valuable equipment is lost or stolen.
- Tenant property improvement insurance: Do you rent space to conduct your business? Have you built out the interior of your space or made improvements to accommodate your business needs? Many property insurance policies don’t include the value of improvements made by a tenant to the existing structure, so it’s worth securing coverage to protect that investment.
- Home-based business equipment: More people work at home at least part of the time, even if they maintain an office or site elsewhere. Most don’t have insurance on the business equipment they keep at home and often assume a homeowner’s policy would cover it; homeowner’s insurance generally does not cover business equipment, so consider additional protection for expensive items kept at home.
- Business interruption insurance: Disasters such as hurricanes, wildfires or flooding can bring businesses to a standstill for weeks or months. Business interruption insurance can provide a way to recover income and get back on your feet after a significant disruption.
- Key person insurance: In many companies, the knowledge and skills of a single person or a few individuals are essential to the enterprise’s success. Key person insurance can help a company recover if an essential employee dies or becomes disabled for a lengthy time by providing funds to continue operations while a successor is found or trained.
Business interruption coverage can be complex and may include options specific to income replacement and extra expenses; see Loss of Business Income/Eldercare for additional context on income-loss options.
As you can see, there are many hazards businesses face that aren’t covered under a typical insurance policy. You can get extra protection with the types of coverage outlined here, and it pays to make sure you have the protection you need. For guidance tailored to smaller enterprises, review Small Business Insurance or talk to an agent.
Frequently Asked Questions
Does my commercial auto policy cover tools stored in a company vehicle?
Not always; many commercial auto policies exclude or limit coverage for business property stored in vehicles, so you may need a separate inland marine or equipment floater policy.
Will my landlord’s insurance cover tenant improvements I paid for?
Usually no; landlord policies typically cover the building owner’s property, so tenant improvements often require separate coverage or endorsement to protect your investment.
Can homeowner’s insurance cover my home office equipment?
Standard homeowner policies generally exclude or limit business property, so scheduling business equipment or buying a business policy is usually necessary for adequate protection.
When should a business consider key person insurance?
Consider key person insurance when the loss of a single employee would cause significant financial hardship or operational disruption to the company.