Six Basic Types of Business Insurance You Might Need

Successful companies of all sizes readily address their insurance needs so they won’t later be caught off guard by either a baseless or valid legal claim. No matter how hard you try to provide flawless products and services to the public, there’s always a chance that a defective product or business transaction may render you liable for legal damages.

Although only certain types of companies must carry workers compensation, disability and unemployment insurance to meet federal guidelines, all businesses can benefit from protecting their company assets by purchasing basic and special types of business insurance.

Fortunately, there are only six basic types of business insurance that you and your business partners must carefully review while trying to protect your company against future legal challenges. All six are set forth below with additional information.

Six common types of business insurance

Before reviewing the following types of insurance, be sure to thoroughly discuss the precise nature of all your business transactions with your insurance agent.

  1. General liability insurance. This will provide you with legal defense support for a variety of alleged wrongs. For example, your company may be sued based on a personal injury claim or the alleged statements of one of your employees. For example, if one of your customers is seriously injured while visiting one of your offices or factories, this policy can help you compensate the injured party for all bodily injuries and medical expenses. In addition, this same type of policy could protect you if a court holds one of your employees liable for business libel or slander — for damages up to the maximum amount of coverage stated in your policy.
  2. Product liability insurance. Even some of the most reliable products on the market will occasionally malfunction and harm a consumer. For this reason, you must secure an ample amount of product liability insurance coverage for this type of claim.
  3. Professional liability insurance. If your company provides any types of services to customers, you must carry this type of policy – often referred to as “E and O” (errors and omissions) coverage. This policy will cover the costs of defending your company in a civil lawsuit that may be based on the alleged grounds of malpractice (often medical or legal). The insurance industry doesn’t view these types of claims as eligible for coverage under either general liability insurance or a homeowner’s insurance policy.
  4. Commercial property insurance. Industrial fires, floods, windy hail storms and other natural disasters can quickly destroy critical manufacturing plants, office buildings and valuable inventory. Always be sure to carry ample coverage under this type of policy — based on recent property value appraisals.
  5. Home-based business insurance. This type of policy is usually offered as a rider to a person’s homeowner’s insurance. It provides limited coverage for such problems as business equipment and inventory damages. This type of policy can also provide funds to cover liability claims brought by injured third parties.
  6. A business owner’s policy. This general type of coverage can let you bundle nearly all (or most) of your insurance needs into one policy. If you pursue this option alone – make sure it adequately protects you regarding all the most unique aspects of your company’s goods and services.

When discussing your insurance needs with your lawyer and insurance agent

Always talk about every reasonable type of harm that your business might suffer. Also, make sure you’ve chosen the best type of partnership or corporate structure to further protect your personal and business assets. Once you fully understand all the risks your company might face, find a highly respected business insurance broker. Always ask trusted business peers for their recommendations for this type of agent.

Finally, speak with your Houston business law attorney about all the specific types of insurance required by the state of Texas for a company like yours. And be sure to address all the federal government’s insurance requirements. Keep in touch with your insurance agent and lawyer throughout each year so they can each readily update you about new legal or policy requirements that may affect your current coverage during the upcoming year.

Please feel free to contact a Murray Lobb lawyer so we can talk with you about the legal aspects of obtaining adequate insurance coverage for all your business needs.

Key Traits New Business Partners Must Readily Offer

Although only 20% of new businesses fail during their first year, roughly half of them cease operations during their first five years. Frequently, the biggest problems develop because the founders failed to choose the best group of partners available to start the company.

Each potential business partner’s personality traits, ethical values, passion and proven skills must be carefully evaluated. Only then can everyone work hard together to define and establish high performance standards while carefully marketing the company’s goods and services to the public.

Here’s a general overview of the partner skills and traits that some business experts believe can provide a new company with a strong chance to succeed for many years to come.

Top skills and traits your partners must have and be willing to share with each other

  1. Trustworthiness, discretion and moral integrity. In addition to partners whose references say they’re definitely trustworthy– you also need people who have an innate need to treat others fairly and want to act as good role models for ethical business behavior;
  2. Keen intelligence and a proven track record of success. Ask all potential partners about their past business successes and failures. Find out if they have truly learned from all past experiences. The crucible of the workplace often provides the best measure of a potential partner’s ability to succeed in a new business venture. Look for highly intelligent partners who can readily respect other people’s creativity — while still bringing their own fresh, original ideas to the table;
  3. Able to maintain a consistently positive, “can do” attitude. Nothing can bring a business to its knees quicker than one or two partners who keep forecasting doom. Be sure each person will remain actively involved in all key company decisions and “go the extra mile” without being asked to do so on many occasions;
  4. Able to display strong, supportive communication skills. All companies need strong communicators who can create proper standards for respectfully interacting with others. These standards must apply to all in-person meetings, phone conversations, the exchange of emails and the use of social media. Each partner must also clearly communicate his or her support for others within the company;
  5. Can offer unique skills that help balance out those offered by the other partners. In addition to someone who can handle complex accounting matters, you’ll also need partners who are strong planners, innovative geniuses, marketing wizards and product (and service) development experts. You’ll also need at least one partner who maintains strong connections to industry experts who can provide your company with timely advice, crucial consultants and other contacts over the years;
  6. Can remain open-minded and is willing to constructively resolve conflicts with others. Always learn all you can about each potential new partner’s openness to the ideas of others and ability to compromise on matters. Also try to evaluate the person’s mature ability to acknowledge personal mistakes – and learn from them. You don’t need any partners who constantly try and prove themselves “right” about everything;
  7. Has the ability to handle different levels of risk and uncertainty. This may be the hardest trait of all to discern – but it’s well worth finding out if someone can remain fully productive – even when unexpected business challenges arise. Always ask about past business difficulties and how the partner candidate personally responded to them. Resilience in the face of change is a key trait of all successful business partners.

Once you’ve selected all your partners, you’ll need to meet with your Houston business lawyer to draw up a partnership agreement that clearly addresses such matters as each person’s roles and responsibilities, how (and when) everyone will be compensated – and how the company must respond when anyone chooses to leave the partnership.

Please contact our Murray Lobb office so we can provide you with the guidance you’ll need when forming any new business. Our firm’s lengthy experience working with professionals in numerous fields allows us to provide you with the help you’ll need.