Home » How Business Insurance Works
diciembre 29, 2023
Hernandez Insurance Services

How Business Insurance Works

Businesses of all sizes and across all industries must plan for the future, including short-term goals, long-term aspirations and potential innovations. However, while perhaps not as enjoyable, responsible organizations must also consider what could go wrong and make appropriate preparations to ensure that accidents, errors and other unexpected circumstances do not wreak havoc on their financial situations. With this in mind, understanding the intricacies of business insurance is essential.

What Is Business Insurance?

Also known as commercial insurance, business insurance typically refers to a package of policies that can provide financial protection from relevant risks and exposures. Although purchasing coverage in bundles may be possible, such as through a business owners policy, many organizations may need to assemble their insurance portfolios carefully to ensure it meets their needs and provides adequate financial security.

What Is Included in Business Insurance?

An ideal insurance portfolio for any business may vary significantly depending on unique circumstances, such as industry, location, number of employees and necessary coverage limits. Still, in many cases, the following types of coverage may be advisable investments for most companies:

  • Commercial property insurance—Also known as business property insurance, this coverage financially protects a policyholder’s physical assets, such as structures, electronics, equipment, tools, inventory and furniture.
  • General liability insurance—This coverage can financially safeguard organizations from the fiscal consequences of incidents affecting other parties, such as the bodily injuries of a guest or a customer’s property having been damaged.
  • Workers’ compensation insurance—Legally required in many cases, this type of insurance can offer financial assistance in response to employees’ on-the-job injuries and illnesses, including for medical bills, lost wages, disability benefits and employers’ legal costs should a lawsuit be filed.
  • Business interruption insurance—Following a disruption of normal operations, these policies, also known as business income insurance, can compensate companies for ongoing expenses and financial losses, such as rent, loan payments, employee wages and reduced revenue.
  • Employment practices liability insurance—If a current, former or prospective employee sues their employer over alleged improper workplace practices (e.g., discrimination, harassment and wrongful termination), this coverage can help pay for resulting losses and legal expenses.
  • Errors and omissions insurance—Also known as professional liability insurance, this coverage may render financial aid and limit out-of-pocket costs if a business is accused of providing goods or services that were incorrect, misrepresented, late or otherwise insufficient.

Additional types of insurance may also be necessary depending on a business’s operations. For example, those using motor vehicles should ensure appropriate commercial auto coverage. Similarly, companies that work with sensitive data should highly prioritize cyber liability insurance.

How Can Business Insurance Protect Policyholders?

Once a business has identified its coverage needs, it can often customize various policies and components to meet other preferences, such as budgetary limitations and endorsement-related necessities. By selecting appropriate types of insurance and maintaining coverage through regular (e.g., monthly) premium payments, organizations can file claims against their policies following covered incidents. If approved, resulting payouts may be critical in limiting out-of-pocket losses.

Get the Right Coverage

With over 20 years of experience serving businesses, families and individuals, Hernandez Insurance is well-equipped to help companies assess and address their coverage needs. Contact us today to learn more.


This blog is intended for informational and educational use only. It is not exhaustive and should not be construed as legal advice. Please contact your insurance professional for further information. 


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