Module Review

The four categories of insurance required by a business are:

Property and Casualty Insurance - covers damage to business assets.
Liability Insurance - covers damage to others' property and person for which the business is responsible.
Employee Insurance - protects the employee in case of illness or disability and the employee's family in case of death.
Business Owner Insurance - protects the owner if the business is disrupted or the business in case of the owner's death.

Insurance is available for almost every risk a business owner might encounter, but insuring every risk might not be cost-effective. While legal and contractual requirements may make some types of insurance a necessity, other types of insurance should be considered in light of a thorough analysis of business risk and the development of a comprehensive risk management system.

Businesses have a responsibility not to harm their customers. Four theories of product liability exist:

Breach of Warranty - A breach occurs when a product does not perform as advertised when the product is not fit to be sold (merchantability), or the product does not work for the purpose it was created (fitness for a particular purpose).
Negligence - Business has a duty of care. If that duty is breached and it causes injury, and that injury can be measured, negligence has occurred.
Strict Liability - If the injury is caused by a product defect, it falls under strict liability laws.
Consumer Protection - This theory calls for alerting consumers to the dangers of products and calling for products to be recalled.

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