Insurance Business Money Buy Liability Company Costs Compensation

In the United States, businesses buy many kinds of business insurance to cover their "losses" (the money that they might lose if certain bad things happen).

"General liability insurance" protects a company if it is "sued" (brought to court by another company or person). General liability insurance pays the "legal costs," such as the costs of paying for a lawyer and preparing paperwork, up to some maximum amount, called the "cap." Companies might need to use general liability insurance if an employee who was fired becomes angry and sues the company, or if the company breaks a "contract" (written agreement) with another company.

Another type of business insurance is "worker's compensation insurance," which covers the costs of workers who are "injured" (physically hurt) while they are working for the company. In most states, companies are legally required to buy worker's compensation insurance. That way, if someone is injured while working, the insurance policy will give him or her money to pay for "medical bills" (the money that needs to be paid to doctors and hospitals) and for the money that he or she cannot earn while unable to work. If the worker dies, then worker's compensation insurance pays money to the husband/wife and children.

Finally, many businesses buy "property damage insurance." This kind of insurance covers "damages" (physical harm to something so that it cannot be used or is not as pretty as before) to a business's "property" (physical buildings or large pieces of equipment). If there is a fire or flood, or if a car drives through a store's window, property damage insurance will pay for the costs of the damage, so that the business can pay for repairs (the things that must be done to make the property better).