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What Is Business Insurance? What Are Its Features and Benefits? Research Team | Posted On Wednesday, August 29,2018, 12:13 PM

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What Is Business Insurance? What Are Its Features and Benefits?




A business is associated with complex risks and liabilities. Corporations and businesses have to abide by strict legal requirements and tax regulations. Therefore, it is vital to get a business insured so as to minimize financial losses arising out of external forces and even the company’s own moves.

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What Is Business Insurance? What Are Its Features and Benefits?

Business Insurance is specifically designed for business purposes. It is an insurance availed by large corporations or companies to cover operational risks like theft, employee’s health benefits, financial losses, and so on. Business Insurance is also known as Corporate Insurance.


Types of Business Insurance:

There are different types of Business Insurance or Corporate Insurance:

  1. Workers’ Compensation Insurance
  2. Property Insurance
  3. Business Interruption Insurance
  4. Product Liability Insurance
  5. Professional Liability Insurance
  6. Group Health Insurance


1. Workers’ Compensation Insurance:

Injuries at workplaces could happen anytime. Irrespective of whether employees have a health insurance policy or not, the business is responsible for medical costs should they suffer injury or illness on the job. Having Workers’ Compensation Insurance prevents a business from spending out of pocket.

Workers’ Compensation Insurance not only covers medical treatment of employees arising from work-related accidents and illnesses, it also provides compensation in case of death or disability. In the absence of Workers’ Compensation Insurance, the business becomes liable for such costs. The business could be penalized.

Workers’ Compensation Insurance policy should be availed by a business, when it hires its first employee.


2. Property Insurance:

A Property Insurance is also known as Business Property Insurance or Commercial Property Insurance. This protects a company’s physical assets like the commercial building, its contents and exterior fixtures from natural calamities, fire, explosions, theft, worker’s unrest and vandalism. However, this policy typically doesn’t cover earthquakes and floods unless specifically added to the policy.

A Business Property Insurance plan can be availed if a business owns the property or has acquired it on lease. Work from home businesses can also avail this insurance.

The scope of policy coverage depends on the type of Property Insurance, which can be:

a. All-Risk Policy: This policy covers almost all types of risks.

b. Peril-Specific Policy: This offers financial cover only for risks or losses listed in the policy.


3. Business Interruption Insurance:

A Business Interruption Insurance covers loss of income suffered by a business, after a disaster or any other interruption. The income loss may be incurred due to closing the business facility after a disaster or due to the rebuilding process of a business after a disaster. A Business Interruption Insurance covers the losses incurred by a business due to events or occurrences that interrupt the normal course of business.

While a Property Insurance policy covers damages caused to the physical assets of a business, a Business Interruption Insurance policy covers the profits that would have otherwise been earned by the business. A business can operate in the same financial position that it would have otherwise, had this event not occurred.

It covers profits, fixed costs, operating expenses, relocating to a temporary location, Commission and Training Costs.


4. Product Liability Insurance:

It is important for a manufacturing business to protect itself against claims arising out of damage or injury caused by its products. Product Liability Insurance policies are tailor-made according to industry-specific needs.

Product Liability Insurance protects a business against claims of personal injury or property damage caused by its products. It is designed to help protect your business, by ensuring that the legal costs arising out of such situations are covered.

Accidents vis-à-vis products could happen anytime. In such cases, a business may face claims of personal injury or property damage which can be expensive. Therefore it is best to avail this policy rather than pay out of pocket.


5. Professional Liability Insurance:

A Professional Liability Insurance is also called Professional Indemnity Insurance and Errors and Omissions (E&O) Insurance. It protects companies and businesses from costs arising out of negligence and errors committed by the business.

The policy covers legal costs. However, the policy doesn’t cover criminal prosecution and other liabilities, not listed in the policy. These are industry-specific policies designed to meet requirements of business belonging to different industries.

A Professional Liability Insurance is a must for medical and legal professionals and organizations dealing with accounting, finance, consulting, insurance and so on.


6. Group Health Insurance:

A Group Health Insurance policy offers healthcare benefits to the employees of an organization. This insurance plan offers the same benefits to all insured members of the group. Group Health Insurance policies also offers tax benefits to the company.

An employer group health insurance policy has certain terms and conditions applicable to the entire group insured. But, there are some benefits you can take advantage of:


a. Low-cost: The premiums of a group health insurance plan are lower compared to premiums on a standalone individual health insurance plan, 30-35% cheaper to precise.

b. No medical examination: The advantage of an employer offered group health insurance plan is you are not required to undergo medical check-ups. You, along with spouse and children get automatic coverage from day one.

c. No waiting period: Group health insurance plans have no waiting period. All illnesses are covered from day one. Individual health insurance plans have specific waiting periods for illnesses or pre-existing conditions or diseases. For example, individual health insurance plans have a waiting period of 1-2 years for hernia. Newborn babies are covered only after a waiting period of 90 days from birth.


Features of Business Insurance:

Following are the features of a Corporate Insurance policy:

1. The Group Health Insurance plan covers employees financially. If any employee faces serious health issues, the policy covers the losses.

2. A Corporate Insurance plan protects a business from a lawsuit, irrespective of whether the mistake was committed by the Company or the employee.

3. A Business Insurance plan covers losses arising out of negligence and errors.

Having your business insured is not mandatory, but necessary. It is a wise decision.


Benefits of Business Insurance:

The benefits of Corporate Insurance plans are as follows:

1. A Corporate Insurance covers losses in case of an interruption in the normal course of the business.

2. It protects the company against loss of income arising due to disasters like natural calamities or a fire.

3. Getting a business insured gives more credibility.

4. Providing Group Health Insurance motivates employees to perform. They are assured that the employer’s group health plan would cover hospitalization expenses. Employees are the real assets of a business. This policy ensures safety, and helps retain the best talent.

5. Some clients wouldn’t want to enter into a business contract if the business is not insured.

6. Business Insurance also protects the company against loss of income, arising out of employee unrest.

7. This policy protects the physical assets like furniture, computers and so on from theft.

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