What is insurable interest?
A requirement for obtaining an insurance policy, an insurable interest refers to the level of hardship someone would experience as a result of the loss of someone or something.You have an insurable interest in an item, property or person ifloss, damage or destruction would cause financial loss or other hardship. To have an insurable interest, you would take out an insurance policy protectingproperty, an item or person to mitigate the risk of loss.
Insurable interest applies to people and entities where there is an assumption of longevity. A company has an insurable interest in a property it owns, such as a warehouse or office building. If a fire or other destructive force destroyed that property, it would create an enormous loss for the business. Therefore, the businesswould want to insure against the possibility of unforeseeable damage.
Types of insurance you need to protect your business
One unforeseeable event could have devastating consequences for a small business, which is why there are a wide range of different insurance types available to guard against dangers, including:
- Property insurance:Property insurance covers inventory, equipment, signage and furniture in the event of theft, storms or fire. It is important to note that property insurance policies typically do not cover floods and earthquakes, so if there’s a high probability of these types of catastrophes in your area, you may want to purchase additional coverage
- Life insurance: If your business depends on one or a few key employees, considerpurchasing a key person life insurance policy. This policy gives your company the necessary resources to regroup if a critical employee is lost.
- Business owner’s insurance: A business owner’s insurance policy combines the most common types of liability and property insurance into one package.
- Car insurance: If you have company vehicles, it’s a goodidea to purchase car insurance to protect your company against liability if an accident occurs.
- Worker’ compensation: Workers’ compensation insurance covers medical costs, disability and death benefits if an employee is hurt or dies while performing job-related activities.
- Product liability:If your company makes or sells products, it’s important tohave product liability coverage. While you should take every reasonable measure to ensure that your products are safe, this type of insurance protects you against damages caused by your products.
