Page 508 - Business Principles and Management

Chapter 18 • Credit and Insurance

18.4 Types of Business Insurance

Goals Terms
• Describe several types of property • insurance agents • beneficiaries
and vehicle insurance that busi- • no-fault insurance • liability insurance
nesses need. • health insurance • malpractice
• Identify the types of insurance • disability insurance insurance
businesses should consider carry- • life insurance • bonding
ing on the people associated with
the business.
• Describe additional insurance that
businesses may need to cover
special types of risks.

Selecting and Buying Insurance

Most insurance contracts are purchased from insurance agents. Insurance agents
represent insurance companies and sell insurance to individuals and businesses.
Some agents represent several different insurance companies and can provide
many types of insurance for a business. Other agents represent only one com-
pany or may sell only one type of insurance, such as life or auto insurance.
Most communities have reputable agents offering all types of insurance. There
are often differences in the policies and services offered by different insurance
companies and agents. A businessperson should discuss insurance needs with two
or three agents before selecting a company and the type and amount of insurance.
It is usually not the best business practice to select an agent just because he or she
is able to offer the lowest rates. The service another agent and company provide
if a loss occurs may more than make up for slightly higher insurance premiums.
Figure 18-7 (see p. 496) describes important factors to consider when choosing
an insurance company and an agent.
The primary objectives when purchasing insurance are (1) to get the proper
coverage of risks at a reasonable cost, and (2) to make certain that the insurance
company will pay the claim in the event of loss. For example, a business that needs
fire insurance wants to be sure that the insurance company that issues the policy
will pay a claim promptly so that business activities will not be interrupted. A busi-
ness that buys liability insurance wants to be sure that if a person is injured, the
insurance company will help determine the business’s responsibility and make
a fair settlement with the injured person. Business owners should consider the
areas where major losses could occur when planning the purchase of insurance.

PROPERTY INSURANCE

A business may obtain various types of insurance to fit its needs in protecting its
property. The major types of property insurance that a business might have are

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