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Some of the factors that determine the insurance coverage and policy limits you need include:
- Your industry
- The number of people you employ
- Risks your business regularly encounters. Carpentry firms face more day-to-day physical injury risks than accountants.
Businesses in Illinois usually purchase several types of insurance policies as a package. Common coverage options include:
- General liability insurance to help protect against injury to other people or damage to their property.
- Professional liability coverage, also known as E&O insurance, to help pay for damages and legal costs if someone accuses you of mistakes, missed deadlines or incomplete work.
- Workers’ compensation coverage to assist employees and business owners who suffer job-related injuries by paying for medical expenses and lost wages.
- Commercial auto insurance to cover damages if you or an employee have an accident while driving a company vehicle.
General Liability insurance
Many small businesses in Illinois purchase general liability insurance. If you are accused of injuring another person or damaging their property, general liability coverage helps pay for medical bills and repair or replacement costs for property.
For instance, an employee of a cleaning company at an apartment complex in Aurora uses a cleaning solution that damages a unit’s countertops. The cleaner’s general liability insurance would cover the cost to replace the countertops up to the policy limit.
Construction and cleaning companies in Illinois can also protect essential business gear with tools and equipment insurance. This coverage will help reimburse you for equipment that is damaged, lost or stolen.
If you need to file a general liability claim with your insurance company, how much you have to pay out of pocket will depend on your policy limits and deductible.
Professional Liability (E&O) insurance
Even the most cautious business owners could face accusations of professional negligence, work errors or missing deadlines that cause financial harm.
Professional liability (or E&O insurance) helps cover costs and damages if you are forced to defend yourself from similar accusations.
For example, a client accuses a small architectural firm in Champaign of misplacing important blueprints. If the client sues for financial losses due to project delays, professional liability coverage helps pay the architects’ attorney fees, court costs and any damages if he is held liable.
Workers’ Compensation insurance
Illinois requires businesses with employees to purchase workers’ compensation coverage, which helps pay for medical bills and lost wages.
Sole proprietors, business partners and owners of limited liability corporations (LLCs) have the option to waive workers’ compensation coverage in Illinois,2 but many still purchase workers’ comp so they are financially protected if they get hurt on the job.
For instance, a self-employed personal trainer in Springfield dislocates a vertebrae while instructing a client and needs to spend four weeks recovering. Workers’ compensation covers the trainer’s medical bills and helps pay for lost wages.
Commercial Auto insurance
If you own vehicles that are titled to your business, you must carry commercial auto insurance in Illinois. Your personal auto insurance probably won’t help if you have an accident when driving a company car.
Illinois requires businesses to carry a minimum of $50,000 in commercial auto liability insurance.3 If your company owns multiple vehicles and employees regularly drive them, you might consider carrying more than the minimum coverage to avoid out-of-pocket expenses.
An example: The owner of a house cleaning business in Chicago is driving home from a job on an icy road in West Loop and totals a company car. Commercial auto insurance would help the cleaning company purchase a new vehicle up to the policy’s limits.
Small businesses might sometimes ask employees to drive their own cars for a job or rent vehicles. Hired and non-owned auto insurance is a form of commercial auto coverage that helps pay for accident damages in these instances. You can add it as an upgrade to commercial auto insurance from Next Insurance.