Insurance can be intimidating. The industry comes with an entirely new vocabulary, and it can be hard to navigate what type of insurance covers what and where you might need more than one type. That’s why we’ve outlined below some of the more common types of commercial and personal insurance, what they cover, what they don’t, and who you might need them.
Types of Personal Insurance
Insurance, at its heart, is all about balancing worth and risk. To understand the types of insurance, start by thinking about your most valuable assets — your home, your car, your savings — and then think about the common threats to those assets. The more common types of personal insurance policies either focus on specific asset or a specific risk to assets. These include:
A standard homeowners policy includes coverage for your dwelling, other structures, personal property and liability. The dwelling and other structures essentially give you money for repairs in case a fire or hail damages your house or a tree falls on a detached garage. Personal property helps replace your belongings from damage or theft, and liability helps you pay the expenses if someone is injured in your home or you accidentally damage someone else’s property.
Not Covered: Insect and pest damage, mold and water damage, injuries from pools and trampolines
As you can see, homeowners insurance covers more than the home, so if you rent rather than own, it’s still a good idea to get some basic insurance. Renters insurance typically provides the same kind of protection for personal property and liability as homeowners insurance. It also often can provide money for living expenses if you have to move out of your apartment for a fire or certain natural disasters.
Not Covered: Damage to the building itself (subject to the landlord’s insurance), flood and earthquake damage
Almost every state requires that anyone who owns or leases a vehicle has car insurance, so this is the policy you’re likely most familiar with. Automobile insurance helps repair your car if you’re in a wreck or replace your car if it’s stolen. If you cause a wreck, it can also cover repairs to the other owner’s car as well as any medical bills or lost wages due to the accident.
Not Covered: Personal belongings in the car, natural disasters, vehicle accessories, pet injury
If your assets are worth more than your homeowners or auto insurance limits, you can purchase additional coverage in the form of an umbrella policy. Typically, people who purchase umbrella insurance are worried about the risk of personal liability from injuries in their home or lawsuits for slander, libel or malicious prosecution. It can also help reimburse expenses from false arrest or imprisonment.
Not covered: Any liability you willingly assume under a contract, criminal activity
As you might have noticed by now, flood is one of the most excluded disasters to any insurance policy. This is because floods can cause massive damage, and it can be hard to predict what specific locations are at risk: in heavy rains your basement might flood while your neighbor’s is fine. Just as with homeowners insurance, flood insurance covers both the building and its contents, but the cause of the flood matters. “Flood” in this case is specific to excess rain or rising water and does not include burst pipes or mold or mildew that could be avoided.
Not Covered: Cars, trees, fences, septic tanks, decks, pools, additional living expenses, currency and valuable papers.
Other types of personal insurance typically center different assets: specialty vehicles like RVs or motorcycles, boats, second homes, or especially valuable property like heirloom jewelry or art.
Types of Business Insurance
Just as with personal insurance, if your business owns its location, you need property insurance. If it owns vehicles, you need commercial auto insurance. You can purchase an umbrella policy or flood insurance for the same reasons as you would personally. But there are also some types of insurance unique to businesses that you should consider to protect your property. Let’s discuss the different types of business insurance, also known as commercial insurance.
General Liability Insurance
General liability is basically protection for businesses against lawsuits. This could include a customer suing because of bodily injury at your location or a business associate suing because of property damage during a product delivery. It also helps cover court costs for copyright infringement or libel if your business gets sued.
Not covered: Employee injuries, theft, damages to your property and professional errors
Workers Compensation Insurance
In Tennessee, if you have five or more workers, you need workers compensation insurance. Workers comp typically covers medical expenses, lost wages and rehabilitation for employees who are injured or become ill on the job. It also pays death benefits to families of employees who are killed on the job.
Not covered: Driving to/from work, horseplay, intentional injuries, policy violations
Under bond insurance, the insurance company guarantees your customers repayment if your company does not meet the conditions of the contract. Surety bonds safeguard third parties in your business dealings and can be a way to establish trust and certify that your company will fulfill the terms of the contract. Bond insurance is required for car dealers, construction companies, transportation companies and mortgage and finance companies.
Not covered: Varies based on the type of bond.
Cyber insurance has become a necessity as more and more business is conducted online. Cyber insurance protects your business’s liability for a data breach involving sensitive customer information. It can also cover repair to your computer systems if your company is the victim of a cyber crime or virus.
Not covered: Costs for improving technology after a cyber-attack, loss of value, profits or IP caused by cyber theft
Errors and Omissions Insurance
Errors and omissions insurance protects you from lawsuits claiming negligence, malpractice and other professional errors. This insurance doesn’t just protect a business, but any person providing a professional service to clients. It covers legal fees and related expenses as well as judgements and settlements.
Not Covered: Employment disputes, sexual harassment and discrimination claims, wrongful termination
Other Types of Business Insurance
Other common types of commercial insurance include inland marine and ocean marine, for freight protection, and directors and officers insurance, to specifically protect management liabilities. Many businesses also seek additional protection for crime and employee benefits.
Whether you choose to include these, or almost any of the other types of commercial insurance, really depends on the size and focus of your business. If you’re embarking on a commercial insurance journey, see our recent blog on what to look for in a business insurance plan.
Consult an Insurance Service
With all the insurance types available, and the multitude of insurance providers, it can be difficult to know if you have adequate coverage and are paying a reasonable price. Inter-Agency Insurance services makes insurance easy by creating a coverage plan that is tailored to your specific needs and negotiating with insurance carriers on your behalf. If you’re unsure where the gaps in your insurance coverage might be, contact Inter-Agency Insurance Services by calling (865)637-4519, visit inter-agencyinsurance.com or request your personalized quote for free today!