(RMI) Insurance Basics Lesson

Insurance Basics

Before we can learn about some of the basic types of insurance, we need to learn some insurance terminology to aid our understanding. Use the flashcards below to review the terms.

Types of Business Policies

As you read through this lesson, some of the policy types may sound familiar because several types of insurance policies for business are similar to policies for individuals. Going through the information below, think about the categories of risk we discussed earlier and try to match it up with a type of policy. There are four basic insurance policies that every business should have:

PROPERTY INSURANCE protects from the loss of a business structure as well as personal property inside it. In the case of fire, storms, theft, or vandalism, the policy holder will be reimbursed for their loss according to the limits of their policyProperty Insurance. This insurance protects from the loss of a business structure as well as personal property inside it. In the case of fire, storms, theft, or vandalism, the policyholder will be reimbursed for their loss according to the limits of their policy. Deductibles usually apply. Property insurance policyholders need to be sure their coverage is for the replacement value of their property rather than the market value in order to be assured of being able to buy new property.

Liability Insurance. The key to liability insurance is that the policy holder is "at fault." While many of you will recognize liability insurance as a component of automobile insurance, liability also extends to the workplace. Whether a customer is injured from a defective product or an employee is injured by faulty equipment, liability insurance can transfer some of the risk of these occurrences.

BUSINESS AUTO INSURANCE will cover all of the vehicles owned by the business and, by law, most states require all vehicles which will pay for injury or property damage if the person driving the company vehicle was at faultBusiness Auto Insurance. Very similar in scope to individual auto insurance, a business auto policy will cover all of the vehicles owned by the business. By law, most states require all vehicles to carry liability insurance which will pay for injury or property damage if the person driving the company vehicle is at fault. Businesses can also carry collision and comprehensive insurance which protects the business owned vehicles.

Workmen's Compensation Insurance. Nearly every state requires businesses to carry workmen's compensation insurance. This type of insurance pays the medical bills of employees injured on the job as well as wage replacement for the time they are off from work from being injured. Generally, an employee paid under workmen's compensation insurance gives up the right to sue the employer for negligence associated with the accident that caused their injury.

 

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