What Is the Purpose of Insurance?

As a business owner, your company faces different risks every day. The purpose of insurance is to help protect your business from these risks. Business insurance helps protect your business’ financial assets, intellectual and physical property from:

• Lawsuits


• Property damage


• Theft


• Loss of income


• Employee injuries and illnesses

You can get different types of business insurance to help protect your business, including:

• Commercial liability


• Commercial property


• Commercial auto


• Workers’ compensation

Types of Business Insurance Policies

At a minimum, you may want to have liability and property coverages. And if you have employees, you’ll likely need workers’ compensation insurance. You should review your business’ insurance needs regularly, because as it grows, your required coverages can change.

Liability Policies

Liability coverage can help protect your business against claims for:

• Bodily injury


• Property damage


• Advertising injury


• Errors or omissions

Without this coverage, you may be responsible for paying out of pocket for legal costs, such as attorney fees and settlement amounts. Common liability policies include:

• General liability insurance


• Professional liability insurance


• Commercial umbrella insurance


• Directors and officers insurance

Employee Insurance Policies

• Job risk


• Claims history


• Payroll size

Property Policies

According to the Federal Emergency Management Agency, about 40% to 60% of small businesses never reopen after a natural disaster.1 Without property insurance, it can be difficult for your business to recover from severe property damage. You’ll be responsible for replacing the damaged property, which can be expensive.

Commercial property insurance helps pay to repair or replace property damaged from:

• Fire


• Storms


• Theft


• Other covered events

This coverage can help pay for damage to your business’ physical location, tools, assets and documents. It can also help cover your business’ lost income if it’s unable to open while repairs are made.

Be aware most commercial property insurance policies don’t protect against flood damage. You’ll have to get a separate commercial flood insurance policy for your business’ property to help cover this type of claim.

Risk Management

Some insurance companies can help your small business with risk management. For example, our risk engineering team has technical specialists who help businesses operate safely and efficiently. They provide services to help identify the causes of accidents and other losses at your business.

Additional Business Insurance Questions

Can I Combine Different Business Insurance CoveragesUnder One Policy?

Yes, it’s possible to combine different business insurance coverages from the same carrier under the same policy. One popular option is a Business Owner’s Policy (BOP). This combines general liability insurance, commercial property insurance and business interruption insurance into one policy. Combining these three coverages into one policy makes your insurance easier to manage which is why a BOP is a smart choice for small business owners.

Which Insurance Coverages Are Required and Recommended for Businesses With Employees?

Most states require businesses with employees to provide unemployment and workers’ compensation insurance. In some states, these businesses may also need to provide disability insurance.

You may also want to get an employment practices liability insurance policy. This helps protect your business if a current or former employee makes a claim about their employment. For example, if you’re sued for wrongful termination or discrimination, this coverage can help cover your legal costs. If you or your employees drive for work, it might be a good idea to get commercial auto insurance. This includes more coverage than your personal car insurance and helps cover your business’ costs if you get into an accident.

What Is Business Insurance For?

Business insurance can help you manage your company’s risks. It gives you financial protection from losses that can occur during normal business operations. When you buy insurance coverage, the insurance company helps cover the costs of covered losses up to the limits of your policy. Without coverage, you might have to pay for the costs out of pocket.

Small Business Insurance Definition

Small business insurance helps protect a small business’ property and income, and safeguards it against liability claims.

Getting a business insurance policy helps protect the company you’ve worked hard to build. You’ll want to work with an insurance provider that understands your business’ needs. At The Hartford, we’re backed by more than 200 years of experience and specialize in small businesses. Get a business insurance quote today and find out how we can help protect your business.

You should regularly review the amount your buildings insurance cover as rebuild costs tend to rise over time. Some insurers offer policies that will increase the sum insured automatically in line with rebuild costs.