A quick overview of business insurance

Purchasing business insurance — with its complexities, industry jargon, and intricate legalities — isn't exactly a task most people relish. In fact, even inexpensive office products tend to get a far more thorough pre-purchase evaluation than business insurance does.

But unlike a copier or a new payroll service, business insurance is a purchase that, when not investigated properly, can literally mean life or death for your company. Because research gets short shrift, some firms are left underinsured, while others end up over-insured on unnecessary or overlapping coverage.

The basics

Although it may seem overwhelming, most smaller firms can limit their investigations to three basic types of protection: property, general liability, and workers compensation insurance.

Property insurance protects against physical damage or loss in the case of theft or other catastrophes.

General liability insurance is a form of insurance designed to protect owners and operators of businesses from a wide variety of liability exposures. These exposures could include liability for accidents that occur on the employer's premises, for products sold by the insured, or a dissatisfaction with work completed by the insured.

Liability insurance often comes in the form of a Commercial General Liability policy, also known as a CGL.

There are also specialized forms of liability insurance. For example, Workers' Compensation is form of liability insurance that protects a firm against claims from job-related injuries or illnesses.

Often businesses can bundle property and liability insurance needs into a Business Owners Package Policy, also known as a BOP. (Workers' compensation, however, is typically a separate purchase.)

Befriend a broker

Almost always, the broker is the liaison between you and the insurance company. Brokers make a living out of matching businesses up with appropriate insurance. Finding the right broker for your business — one who looks for low premiums as well as fully understands the risks your company faces — is a bit of a challenge, but well worth the time spent to make sure you have the proper type and scope of policies.