What Are Common Types of Business Insurance?
Common types of business insurance include general liability insurance, which covers areas such as bodily harm, property damage, and personal injury; commercial property insurance, which covers owned or rented business property and equipment; business income insurance, which covers lost income; professional liability insurance, which covers lawsuits against a business; workers' compensation insurance, which covers benefits paid to employees if they are injured on the job, and data insurance, which covers losses from data breaches.
What Is Gross Profits Insurance?
The term gross profits insurance refers to a type of business interruption insurance that provides funds in the amount of profit lost if an insurable event, such as property damage, occurs. Gross profits insurance is most commonly used in the United Kingdom and Canada. This type of insurance differs from gross earnings insurance, which is more commonly found in the United States.
KEY UNDERSTANDINGS
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Gross profits insurance is a type of business interruption insurance that covers lost profit if an insurable event occurs.
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Policy coverage extends through the time in which the insured rebuilds or repairs its business property.
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The policy covers losses experienced while the business is not able to function normally, with a pre-defined indemnification period usually set at a three-year maximum.
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Coverage doesn't cover everything, as proximate cause is used to determine whether or not an event caused the insured party to experience a loss.
What Is Business Interruption Insurance?
Business interruption insurance is insurance coverage that replaces business income lost in a disaster. The event could be, for example, a fire or a natural disaster. Business interruption insurance is not sold as a separate policy but is either added to a property/casualty policy or included in a comprehensive package policy as an add-on or rider.
KEY UNDERSTANDINGS
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Business interruption insurance is insurance coverage that replaces income lost in the event that business is halted due to direct physical loss or damage, such as might be caused by a fire or a natural disaster.
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Business interruption coverage includes business income coverage, extra expense coverage, contingent business interruption coverage, or civil authority coverage.
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This type of insurance also covers operating expenses, a move to a temporary location, if necessary, payroll, taxes, and loan payments.
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In rare cases, business interruption insurance can apply if a civil authority shuts down a business due to physical damage to a nearby business, resulting in a loss for a firm.
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Standard business interruption insurance does not reimburse policy holders if the business is closed due to a pandemic. Even some all-risk insurance plans have specific exclusions for losses due to viruses or bacteria.
Endowments
Endowment life insurance combines life insurance with a savings plan. You can choose how long you want the endowment life insurance protection to last. If you pass away before the maturity date, your heirs receive the insurance death benefit. If you live past the maturity date, you get a large payout from the insurer.
Life Insurance As An Investment Strategy
Life insurance with cash value can be used as an investment tool. As you pay premiums, a portion goes toward your cash value, which will grow over time. Once you've built up enough cash value, you can access it in several ways, including getting a policy loan and withdrawing funds.
For some high-net-worth individuals, life insurance can provide an opportunity to keep wealth in the family and shield it from taxes. In addition, a life insurance policy with an investment component and cash value is a good way to build more tax-free savings, if you regularly max out your retirement accounts.