When you own a business, you need business insurance to protect your company and your assets against potential legal liability. Insurance also covers some types of unpredictable business losses. But how do you determine what types of business insurance you need?
Insurance agents eagerly market many types of commercial insurance. At Peterson Law Offices, PLLC, we don’t sell insurance — but we do provide legal services to East Valley companies, including many small and mid-size companies. In assisting our business clients with protecting their businesses and assets, we help determine what business insurance they need to protect the company and owner.
The first step in assessing your insurance needs involves understanding what types of business insurance are available and what protection each type provides. The following summary covers of the primary kinds of business insurance available to Arizona businesses.
Commercial liability insurance is a basic type of business insurance. It protects the company (and owner) for legal liability arising from many different types of claims involving property damage and personal injury to third parties. General liability insurance policy not only pays claims, but usually also provides your legal defense or helps pay the cost of legal counsel for defending against lawsuits.
Liability insurance covers claims by persons injured on or off your business premises or by defective products or services. Court verdicts from these types of claims can be astronomical. No business should operate without liability insurance — including many home-based businesses.
For a business that involves manufacture, distribution, or sale or wholesale of commodities, products liability insurance also is essential. This coverage provides protection for claims relating to the safety of your products. It may be included in your general liability policy, or it may be a separate policy.
A business that provides professional services requires special liability insurance to cover potential malpractice claims. Examples include companies that provide accounting, legal, or medical services. For some businesses, this coverage may be required by law.
Just as homeowner’s insurance protects your residence, business property insurance covers the premises where your company operates. Also like homeowner’s insurance, which protects your personal property, commercial property insurance covers your equipment, inventory, and other assets on the premises.
Many property policies include coverage for business income and interruption coverage, which is important if your business needs to close because of an insured incident. Your specific policy determines your coverage.
Your policy also details what types of incidents are covered. Some property policies are all-risk. Others are peril-specific and cover only specific types of incidents.
Your personal auto insurance probably does not cover your business vehicles. A separate commercial auto policy provides coverage for your vehicles and company drivers.
An umbrella policy improves the protection of your liability policies, including general liability and auto insurance. It provides excess coverage if the limits of your other policies are exceeded in a specific claim. Without umbrella insurance, you could end up paying out of pocket if damages are greater than your policy limits.
Companies in Arizona often bundle insurance into a single policy, called a Business Owner’s Policy or BOP. Commonly, the policy includes business liability, property, and income coverage. Additional coverage may be added to address unique needs of your business.
Arizona requires every business with employees to carry workers’ compensation insurance. A sole proprietor with no employees is not required to have the coverage.
Figuring out the right insurance coverage for your business can be an overwhelming task, especially since your insurance agent’s interest is to sell you as much insurance as possible. As part of helping business owners with a wide range of issues, East Valley attorney Shane Peterson assists clients in making this assessment. Shane’s real estate background is particularly beneficial to his business clients.
Business planning is essential for every company. That planning includes many different considerations, including what type and how much insurance you need. New businesses should put insurance in place when establishing the business. Existing companies should reassess insurance needs as they grow.
In serving our business clients at Peterson Law Offices, we help owners set up a new business, as well as provide on-going legal counsel and planning advice for on-going operations. If you own a small and mid-size business that does not need an in-house lawyer, establishing a working relationship with us enables you to have an experienced business attorney “on call” when you need help with any business matter.
At Peterson Law Offices, we provide high-quality business law services at affordable prices. We welcome inquiries from business owners throughout the East Valley, including Queen Creek, San Tan Valley, Gilbert, Mesa, and Chandler. Schedule your free initial consultation by calling 480-878-5998 or using our online contact form.
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