How Insurance Works For Businesses
Business Insurance is a means of providing protection your business against financial loss in a variety of situations. It is a contract in which one party agrees to pay for another party’s financial loss resulting from a specified event.
Business Insurance works on the principal of sharing losses. If you wish to be insured, against any type of loss, agree to make regular payments, called premiums, to an insurance company. In return, the company gives you a contract, the insurance policy. The company promises to pay a certain sum of money for the type of loss stated in the policy.
Businesses buy property and liability insurance to protect their assets against financial loss. Property insurance provides direct compensation if a policyholder’s buildings or equipment are damaged, destroyed, or lost as a result of covered perils. Liability insurance protects individuals and businesses against possible financial losses if their actions result in bodily injury to others or in harm to property owned by others.
Financial stability and strength of the insurance company should be a major consideration when purchasing an insurance contract. An insurance premium paid currently provides coverage for losses that might arise many years in the future. For that reason, the viability of the insurance carrier is very important. In recent years, a number of insurance companies have become insolvent, leaving their policyholders with no coverage (or coverage only from a government-backed insurance pool with less attractive payouts for losses).
A key part of running your business is keeping employees safe at work. However, if a worker does suffer an injury, workers compensation coverage provides you and your employees with important protection.
Workers compensation coverage is a state-mandated insurance program that covers lost wages and medical treatment resulting from an employee’s work-related injury or illness. It also covers services needed to help an employee recover and return to work.