Management InSites

Glossary – Types of Insurance

When establishing a company in the U.S. market, several types of insurance are required and others may be necessary, even if they aren’t mandatory. What is required depends on the circumstances. Companies and individuals in the U.S. have a history and tendency to be quite litigious, therefore it is wise to be fully covered in the event that a problem or lawsuit should arise.

First, it is important to understand exactly what insurance is. Insurance is the equitable transfer of the risk of a loss, from one entity to another in exchange for payment. It is a form of risk management primarily uses to hedge against the risk of a contingent, uncertain loss. Typical U.S. insurance types are listed below, but this list is not exhaustive:

Insurance typically required and used by companies:

  • General Liability Insurance: In the United States, general liability insurance coverage most often appears in the Commercial General Liability policies obtained by businesses, which covers both public and product risks. It is a part of the general insurance system of risk financing to protect the purchaser (the “insured”) from the risks of liabilities imposed by lawsuits and similar claims. It protects the insured in the event it sued for claims that come within the coverage of the insurance policy.
  • Property Insurance: Provides protection against most risks to property, such as fire, theft, and some weather damage. This includes specialized forms of insurance such as fire insurance, flood insurance, earthquake insurance, home insurance, or boiler insurance. Property insurance covers your office or manufacturing facility, but also your goods in third-party warehouses.
  • Umbrella Insurance: An umbrella insurance policy offers extra liability coverage that goes beyond the limits of the insured’s general liability insurance. It protects against being sued for damages and owing more money than is covered by the general liability policy. It also protects against libel, vandalism, slander, and invasion of privacy.
  • Worker’s Compensation (WC): WC is a form of insurance providing wage replacement and medical benefits to employees injured in the course of employment in exchange for mandatory relinquishment of the employee’s right to sue his or her employer for the tort of negligence. There are different requirements in each state as to how many employees a company can have before this becomes a mandatory requirement.
  • Cargo Insurance: A sub-branch of marine insurance, covering a company’s property that is shipped via freight on ships. When transporting goods via mail or courier, shipping insurance is used instead.
  • Directors and Officers Liability Insurance (D&O): D&O is liability insurance payable to the directors and officers of a company, or to the organization(s) itself, as indemnification (reimbursement) for losses or advancement of defense costs in the event an insured suffers such a loss as a result of a legal action brought for alleged wrongful acts in their capacity as directors and officers of the company. (It is typical for a company and its officers to be named in a lawsuit.)

Insurance engaged less frequently, depending on certain circumstances:

  • Renter’s Insurance: If the company plans to pay for an apartment, most complexes require renter’s insurance. This provides most of the benefits of homeowner’s insurance (which should be bought if a house or condo is purchased instead of rented). The tenant’s personal property is covered against named perils such as fire, theft, and vandalism. The owner of the building is responsible for insuring it, but bears no responsibility for the tenant’s belongings.
  • Auto Insurance: If you will have a company car, auto insurance is needed. It typically includes property coverage (damage or theft of the car), liability coverage (legal responsibility to others for bodily injury or property damage), and medical coverage (for bodily injury, rehabilitation, lost wages, and funeral expenses).
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Read more
  • International Shipping and Incoterms

    When dealing with shipping internationally, especially from abroad to the U.S., setting the terms of the transaction from the moment the customer requests a quote is incredibly important. To avoid problems, unwanted costs, and even potential legal issues, there should be no room for confusion or ambiguity in the contract you set up with your customer.

    March 8, 2021
  • Shipping with HS and HTS Codes

    If your organization intends to ship or receive items to or from overseas, it is important to understand an integral part of the international shipping process: the Harmonized System (HS) and Harmonized Tariff Schedule (HTS), which were developed by the World Customs Organization.

    February 8, 2021
  • The Right Content for Your Content Strategy

    In this post, we explore the type of content to consider posting across platforms for a strong content strategy. Content can come in many forms.

    January 27, 2021
  • The Importance of Depreciation and Asset Management

    In a previous post, we discussed the importance of maintaining good accounting and bookkeeping practices. One aspect of proper bookkeeping includes tracking depreciation and asset management.

    January 7, 2021
How can we help you?
Contact us or submit a business inquiry online.

Glossary – Types of Insurance

In our previous post on the topic, we covered some important things to remember when setting up your company in the U.S. market. Beyond operations, sales, and marketing, a manager would be remiss not to focus on how cultural differences might impact the success of a subsidiary.

The U.S. is not homogenous

Unlike several other countries, the U.S. is vast – and not just in its size. Americans tend to break up the country into its East and West coasts, and the Midwest. But there are even more segments, like the South, Pacific Northwest, the Northeast, Florida, and Texas – all of which differ greatly from each other. There are several big cities, countless medium-sized markets, and even more rural or suburban areas. Interacting with people living in big cities will differ greatly from interacting with people in smaller towns. While it would be unwise to generalize, it is best to understand the culture of the part of the U.S. in which you are doing business before having expectations.

Patience is not always a strength among Americans

When in negotiations or conducting business, Americans tend to want to just get the deal done. While many other cultures take their time, get to know everyone involved, and move along at a comfortable pace, those in the U.S. do not always see a need to drag things out. Get ready for what looks like impatience, when in reality it is just a desire to be efficient and effective.

Don’t plan on in-person meetings 

At least not all the time. The tendency for Europeans and Asians to conduct most business in person is not the same in the U.S. Phone calls, emails, and now even video conference calls are the norm. Businesspeople like to work efficiently, and don’t gather in person unless it is necessary. First meetings, larger negotiations, and important topics are generally discussed in-person. Otherwise, don’t be offended or surprised if many of your interactions are taking place remotely.

Open-minded over traditions

A positive aspect of Americans in general is their ability to have an open mind. Many other cultures rely heavily on traditions, and act in certain ways because history dictates that they should. That is not the case in the U.S. Americans tend to welcome new ideas and concepts perhaps more freely than their foreign counterparts.

That being said, Europeans tend to rely on strongly forged bonds in which trust is paramount. Loyalty is key. Americans tend to be looser and more pragmatic when it comes to doing business. They don’t necessarily need to have known someone for years to begin working with them. At the end of the day, it’s about getting the deal done.