BIPL - Module Overview
Business Insurance: Property and Liability
Introduction
Running a business is risky, no matter how small or large the business may be. Business advisers describe five types of business insurance that every business should have: property insurance, liability insurance, business interruption insurance, commercial auto insurance, and workmen's compensation insurance. Beyond those five basic types are all sorts of insurance policies to cover nearly every risk a business might face. If a business has a solid risk management plan, then selecting coverage will be an easy task.
Insurance coverage is available for nearly every conceivable business risk. A business should first create a solid risk management plan, then consult a reputable insurance agent concerning the risks they need to cover. One type of insurance every business should carry is property insurance. This insurance would cover all of the buildings, equipment, and inventory a business owns. Liability insurance protects a business that might be sued due to injury of another on their property or by their product or service. Commercial auto insurance covers vehicles and drivers who are traveling in the course of business. Business Interruption Insurance serves as a "disability" insurance policy for business owners if they become ill or injured. Finally, by law, most businesses that have employees are required to carry workmen's compensation insurance.
Essential Questions
- What are the basic insurance needs of a business?
- What will insurance cost a business?
- Are there laws about the types of insurance a business must carry?
Key Terms
property insurance
: Insurance that protects the physical property and equipment of a business against loss from theft, fire or other perils. All-risk coverage covers against all risks named-peril coverage covers only against specific perils named in the policy.
assets: Property owned by a person or company, regarded as having value and available to meet debts, commitments, or legacies.
equipment: Equipment is the implements used in an operation or activity.
inventory: The raw materials, work-in-process goods and completely finished goods that are considered to be the portion of a business's assets that are ready or will be ready for sale is called inventory.
liability insurance: Insurance that provides protection from claims arising from injuries or damage to other people or property is liability insurance.
replacement cost: Replacement cost is the current cost of replacing a fixed asset with a new one of equal effectiveness.
product liability: The legal liability a manufacturer or trader incurs for producing or selling a faulty product is product liability.
workman's compensation: Workman's compensation is a system whereby an employer must pay, or provide insurance to pay, the lost wages and medical expenses of an employee who is injured on the job.
professional liability: A system whereby an employer must pay, or provide insurance to pay, the lost wages and medical expenses of an employee who is injured on the job is the definition of professional liability.
business interruption insurance: Business interruption insurance provides protection for the loss of profits and continuing fixed expenses resulting from a break in commercial activities.
flood insurance: Flood insurance denotes the specific insurance coverage against property loss from flooding.
earthquake insurance: Earthquake insurance is a form of property insurance that pays the policyholder in the event of an earthquake that causes damage to the policyholder's property.
commercial auto insurance: An auto insurance policy designed to protect a business in the event of accident, theft, injury and/or other damages involving business vehicles and business staff while driving those insured company vehicles, or their own vehicles or rented vehicles for business purposes.
warranty: A warranty is a written guarantee, issued to the purchaser of an article by its manufacturer, promising to repair or replace it if necessary within a specific period of time
tort: Civil wrongs recognized by law as grounds for a lawsuit are torts. These wrongs result in an injury or harm constituting the basis for a claim by the injured party.
breach of warranty: A breach of warranty involves a broken promise about a product made by either a manufacturer or a seller.
strict liability: Strict liability makes a person legally responsible for the damage and loss caused by his or her acts and omissions regardless of fault.
express warranty: An express warranty is a particular stipulation introduced into the written contract, by the agreement of the parties.
implied warranty: An implied warranty is a guarantee imposed by law in a sale. Even though the seller may not make any explicit promises, the buyer still gets some protection.
negligence: Negligence is failure to use reasonable care, resulting in damage or injury to another
misrepresentation: Misrepresentation is a false statement of fact made by one party to another party, which has the effect of inducing that party into the contract.
caveat emptor: Caveat emptor is Latin for buyer beware.
tort reform: Tort reform is proposed changes in the civil justice system that would reduce tort litigation or damages
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