Key Takeaways
- Businesses should assess their risks when choosing insurance type
- Risk profiles are often multifaceted and require careful evaluation
- Working with an insurance agent can help you decide what insurance is best
Business insurance can protect your business from risks and loss, but it’s crucial to pick a suitable kind. For example, the healthcare industry requires medical malpractice insurance, whereas tech companies face unique cyber risks.
The right insurance policies can ensure business continuity. Let’s discuss how to choose business insurance based on your industry.
Understanding Industry-Specific Insurance Needs
The nature of your business industry will determine your potential risks and liabilities. While purchasing a business owner’s policy (BOP) or a generic commercial insurance bundle is convenient, there may be gaps in coverage that leave your business vulnerable.
Employee risks, location, operation types, and other factors all play essential roles in what insurance suits your company. Read on to find out about major industries and what business insurance should be considered.
Retail Industry
Common Risks
Customer injuries: Slips and falls are the most common type of customer injury. Wet floors, unsalted sidewalks, loose flooring, and poor maintenance can lead to customers filing lawsuits against your business. If merchandise collapses onto a customer from a shelf or display, it can also injure customers nearby.
Property damage:
Theft: Theft is a huge problem across retailers. Retail stores lost $121.6 billion to retail theft in 2023.
Product liability: Any retailer that sells products can be held liable for product-related incidents and defects.
Business interruption: Retail stores may be forced to close for a variety of reasons, such as terrorist threats, fires, natural disasters, floods, and vandalism.
Essential Insurance Policies
General liability insurance: Protects your retail store against third-party bodily injury and property damage claims. Covers customer injuries, which is extremely important for any retailer.
Commercial property insurance: A retailer that has a physical location should obtain commercial property insurance. It protects the business’ physical assets, including equipment, building, fixtures, and inventory.
Product liability insurance: Product liability insurance protects your retail business from product liability claims, covering legal fees, settlements, and other expenses.
Business interruption insurance: Retail stores can benefit from business interruption insurance as it helps maintain cash flow, keeping the retail store afloat during halted operations. It compensates for lost income if the retailer is forced to close for a covered reason, such as a fire or significant property damage.
Workers’ compensation coverage: Retail stores have many employees who need to be covered by workers’ comp. It provides lost income coverage and medical benefits to any employee who gets injured or sick on the job.
Tailoring Coverage
Retailers should assess inventory value and foot traffic risks when determining how much coverage they need.
In retail, seasonal adjustments are often necessary due to the influx of customers at certain times of the year. Consider obtaining seasonal business insurance if your business only operates a few weeks or months of the year or if you need extra protection during a busy season.
Construction Industry
Common Risks
Workplace accidents: Construction workers operate under hazardous circumstances, which makes the construction industry one of the most dangerous.
Property damage: Construction companies with physical assets, such as offices, storage facilities, and equipment, can have their property damaged. Common risks include theft, vandalism, fire, and bad weather.
Equipment theft: Construction companies work with numerous high-cost tools and equipment. This essential equipment can be stolen.
Professional errors: The company will likely face expensive lawsuits if construction errors or negligence result in third-party injuries or damages.
Essential Insurance Policies
General liability insurance: A general liability insurance policy can cover third-party liability, such as bodily injury, property damage, and advertising injury.
Workers' compensation insurance: In most states, workers’ comp is mandatory. It is extremely important for any company in the construction industry since it covers employee medical expenses and lost income in case of an injury on the job.
Builder's risk insurance: This is a specialized type of commercial property insurance. It protects buildings that are currently under construction.
Professional liability insurance: Covers errors and omissions. If your construction company gets sued for professional negligence, professional liability insurance will cover legal defense fees and compensatory expenses.
Tailoring Coverage
If your construction business takes on large projects, adequate insurance coverage is essential. Many companies refuse to work with construction companies that lack the necessary certificate of insurance.
Companies working with subcontractors need to have the necessary insurance policy so that liability and medical expenses will be covered.
Equipment coverage can also save you from significant loss. For this, companies can get commercial contractor’s equipment insurance to cover damaged or missing equipment. This type of insurance can also cover employee equipment and clothing, as well as borrowed equipment.
Reducing risks
To reduce the dangers of working in the construction industry, companies need to comply with OSHA regulations for workplace safety.
An added benefit of implementing up-to-date, effective safety measures is that you can reduce your workers’ compensation premium and other insurance premiums.
Technology Industry
Common Risks
Data breaches: Sensitive data being leaked, stolen, or damaged is extremely common in today’s digital age. Cyber criminals can attack your business using social engineering, malware, ransomware, and other malicious tactics.
Intellectual property disputes: Tech companies may find themselves in costly intellectual property disputes. This includes clashing with other businesses over copyright infringement, trademark infringement, and patent infringement.
Professional errors: Making an error at work can cause damages and loss to clients and customers. Tech companies often work with many other businesses and clients, which can worsen the potential consequences of professional errors.
Essential Insurance Policies
Cyber liability insurance: Covers cyber attack-related costs, such as dealing with data breaches, ransomware, and other cyber incidents.
Professional liability insurance (E&O): Covers lawsuits against your business in case of professional mistakes and negligence. Also known as Errors & Omissions insurance.
Intellectual property insurance: IP insurance covers litigation costs that can be invaluable for tech companies. It can protect your tech company from patent infringement claims, copyright claims, and more.
General liability insurance: Other than cyber liability insurance, tech companies should also carry adequate general liability insurance. This covers liability claims against the company from third parties, such as if you are liable for property damage or bodily injury.
Tailoring Coverage
Tech companies need more data security and privacy coverage due to their greater cyber risks.
If your tech company works globally, you may want to obtain global insurance coverage. This is common for enterprises and large companies.
Healthcare Industry
Common Risks
Medical malpractice: When a healthcare worker acts negligently or mistakenly, resulting in the harm or death of a patient, this type of professional liability is considered medical malpractice. Examples of medical malpractice include incorrect diagnoses and oversights.
Patient data breaches: HIPAA is taken seriously in the healthcare industry. If patient data gets breached, you can expect to be faced with HIPAA violation lawsuits. HIPAA violations can cost millions of dollars.
Regulatory compliance issues: Not complying with HIPAA and other regulations can result in fines and legal penalties.
Essential Insurance Policies
Medical malpractice insurance: This type of professional liability insurance is designed specifically to cover healthcare-related liability claims. This is crucial for nurses, physical therapists,
General liability insurance: For more liability protection, healthcare industry practices should also carry general liability insurance. This covers third-party property damage and other liability expenses.
Cyber liability insurance: Healthcare companies are notorious for having poor cyber security. Cyber liability insurance can cover legal costs and compensation related to patient data breaches.
Business interruption insurance: If your healthcare company is forced to close due to a covered reason, business interruption insurance can cover payroll and other operating expenses.
Tailoring Coverage
Medical malpractice and other claims can cause heavy loss, both financial and reputational, for a healthcare professional. Make sure to customize your policy so that the coverage limit is high enough for your needs.
Manufacturing Industry
Common Risks
Equipment breakdown: Industrial machinery can break down, resulting in financial and operational losses.
Product liability: Any products and components made or distributed by your manufacturing company can be trailed back to you if a product causes bodily injury or property damage.
Workplace accidents: Like other industries with manual labor, workplace accidents are common in the manufacturing industry. Employees can get seriously injured while on the clock.
Essential Insurance Policies
Commercial property insurance: Property insurance can cover property damage and losses, such as if inventory and equipment get damaged. It protects manufacturing companies from theft, hail, fires, and vandalism.
Product liability insurance: Also known as products-completed operations coverage, product liability insurance is crucial for any company in the manufacturing industry. It covers claims made against you if your product causes bodily injuries or damages a customer’s property and belongings.
Workers' compensation insurance: Adequate workers’ compensation is crucial for any business in the manufacturing industry.
Equipment breakdown insurance: Covers expenses if your equipment breaks down.
Tailoring Coverage
Manufacturing companies may want additional coverage for product liability and related expenses. Product recall insurance is a good form of protection that helps you handle costly lawsuits.
Supply chain insurance can also be helpful since it helps cover operating expenses in case your supply chain gets disrupted for a covered reason.
Make sure to regularly assess the risks associated with your industrial machinery and update your safety measures.
Hospitality Industry
Common Risks
Guest injuries: Slips and falls are exceedingly common in the hospitality industry.
Property damage: Many hospitality industry companies have physical locations, such as restaurants and hotels. Property damage is a significant concern that may require specialized insurance.
Foodborne illnesses: If you serve food, foodborne illnesses pose a serious liability risk.
Essential Insurance Policies
General liability insurance: Covers liability claims made against a hotel, restaurant, catering service, or other business within the hospitality industry.
Commercial property insurance: Make sure your hospitality company carries a suitable form of commercial property insurance. Specialized insurance is often a good idea. For example, hotels benefit from a hotel insurance package.
Liquor liability insurance: If you serve liquor, it’s important to have the necessary liquor liability insurance coverage.
Business interruption insurance: Even a single day of missed business operations can cause financial issues. Business interruption insurance can cover operating expenses, such as payroll and relocation.
Tailoring Coverage
You may need additional coverage during holiday seasons because of the seasonality in th tourism and hospitality sector. Assess your risks and consider obtaining extra insurance or add-ons for special events, activities, and months.
Professional Services Industry
Common Risks
Professional errors: Accounting, legal services, marketing, and other professional services are prone to lawsuits that arise from professional errors and negligence.
Data breaches: It’s common for professional service companies to store and use sensitive customer information.
Essential Insurance Policies
Professional liability insurance (E&O): Covers claims of negligence and professional errors against you.
General liability insurance: Covers liability claims filed against your professional service company.
Cyber liability insurance: Due to the data breach and cyber incident risks, it’s highly recommended for companies in the professional service industry to obtain cyber liability insurance.
Business interruption insurance: If your business is halted for a covered reason, business interruption insurance can cover operating costs and losses, such as payroll and relocation fees.
Tailoring Coverage
Depending on what your professional service is, you may benefit from customizing your errors and omissions (E&O) insurance. This includes changing your insurance coverage limit and adding endorsements to your insurance policy.
It is highly recommended for businesses to invest in data security and cyber insurance.
Real Estate Industry
Common Risks
Property damage: Structural damage, vandalism, and other hazards can cause expensive damage in real estate.
Tenant disputes: Disputes with tenants can arise from many disagreements and issues.
Liability issues: In real estate, customers and clients may file claims of negligence against you. A liability claim can easily cost over $70,000.
Essential Insurance Policies
Property insurance: Make sure that you have the necessary real estate commercial property insurance.
General liability insurance: Covers third-party liability claims, such as for property damage and bodily injuries.
Professional liability insurance: This type of insurance, also known as E&O insurance, covers mistakes made by your real estate professionals that cause damages and loss to clients.
Business interruption insurance: If you need to halt your real estate services for a covered reason, business interruption insurance can cover operating expenses, payroll, relocation, and other costs.
Tailoring Coverage
If you have multiple properties, make sure you have sufficient commercial property coverage for each and every one of them. A regular commercial property insurance policy may not suffice for the real estate industry.
Nonprofit Organizations
Common Risks
Volunteer injuries: Individuals who volunteer at a nonprofit organization can be injured or get sick while volunteering.
Fundraising event risks: Injured guests, property damage, and other risks are common at fundraising events, especially if there are special performances or activities involved.
Board member liability: Due to advertising injury and other liability risks, your board members may be sued for liability.
Essential Insurance Policies
Special event liability insurance: On top of general liability insurance, it is a good idea to consider special event liability insurance to cover fundraisers and other events.
Directors and officers (D&O) insurance: Coveres expenses related to liability claims against your board directors.
Property insurance: Commercial property insurance helps protect your non-profit organization’s physical locations.
Volunteer liability insurance: Workers’ compensation usually only covers employees, not volunteers. Nonprofit organizations benefit from special volunteer insurance for any bodily injuries your volunteers might suffer.
Tailoring Coverage
Fundraising events can help you with your nonprofit organization’s mission, but they are also huge liability risks. Make sure you have enough liability insurance to cover fundraising events.
Conclusion
Industry-specific insurance is key to any business that faces unique risks and challenges due to their type of operations. Work with insurance professionals to tailor your insurance coverage so that your organization or company is adequately covered.
Remember to regularly assess your company’s insurance needs and risks as your business grows or adapts. Here are some of the best business insurance providers to consider.
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