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Full Version: FreelanceInsure's Guide: What is business insurance?
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Business Insurance is a broadly used name for different insurance packages available to the business owner to protect against losses and to ensure the continued running and operating of the business. It is a broad description that includes a spectrum of different types of policies.Generally, people are well acquainted with insurance cover for their home and car. It protects you against any loss if there is theft, an accident or failure to your home or car. Most of us realize that we would be unable to replace our home tomorrow if there was a fire or to replace our car if it is damaged in a collision, and even if we did not have a legal compulsion to take out insurance, we would probably insure ourselves anyway.The same idea applies to business insurance. The understanding is one of risk. There are risks that, although unlikely ever to be realised, are so critical that it makes sense to think ahead to manage them. In our business lives these risks are often difficult to foresee or assess.Businesses is about risk and about managing these risks, whether it is about employing new staff, starting a new venture, or taking on a new enterprise. However, in business we do not think about some types of risk or deem some situations to be unmanageable in advance, and can only be dealt with when they occur. We turn a blind eye hopeful that nothing “bad” will ever happen. We forget that when a business is not operating, we still have substantial outgoings, but no income.Business Insurance companies operate by charging premiums to a range of commercial operations and individual business people, and then invest this capital to create a pool of money from which they are able to pay out to a covered should they make a claim. These insurers, over the last 250 years, have developed statistical models to assess the chance of a specific risk occurring. In doing so, they have calculated the level of premiums they must charge to stay in business, and have developed general categories of losses that happen the most often, such as fire. Insurance companies produce policies to address these specific types of losses.