Did you know that 40% of small businesses have no insurance at all?
Building a small business is hard work and a risk-filled endeavor. Any entrepreneur who strikes out on their own is aware of this fact and should accept it. Those who are smart invest in business insurance to ensure that unexpected hazards don’t cause financial ruin.
“But what business insurance do I need?”
Read on to learn more about the types of business insurance policies and find out what best suits your needs.
Professional Liability Insurance
At the very least, your business should have professional liability insurance. It protects professionals like accountants, doctors, and lawyers against claims initiated by clients. Claims may include malpractice, negligence, and misrepresentation.
Professional liability insurance may have different names depending on the profession. Errors and omissions insurance protect real estate agents. Medical malpractice insurance covers medical professionals.
It indemnifies your business from claims made during the policy period. It doesn’t cover legal liability under civil law or criminal prosecution. The policy may or may not cover cyber liability, which protects against technology issues like data breaches.
Worker’s Compensation Insurance
Employers are required by law to ensure a safe working place. Still, accidents happen and employees end up with injuries. This is where worker’s compensation comes in. It ensures that workers injured at work get sufficient medical help and compensation for lost income due to a work injury. Employees get workers’ compensation regardless of who’s at fault.
Business compensation insurance is a legal requirement in most states. It indemnifies you against medical expenses and lawsuits related to work injuries. Without it, your business will be liable for any legal fees and medical bills. You’ll also be exposing your brand to hefty penalties for non-compliance.
General Liability Insurance
This small business insurance protects your company from claims of general damages. These include property damage, copyright infringement, personal injury, advertising injury, and reputational harm. Most small businesses need general liability insurance, especially if they rent or own an office or commercial space.
There are other situations where commercial liability insurance can prove beneficial. It can keep your company from financial ruin if a customer or competitor sues you.
Unlike worker’s compensation, general liability insurance is not a legal requirement. Yet, some states mandate this cover for some industries like construction. Your landlord, clients, or mortgage company may also need it. It proofs that your business can handle any property damage or personal injury lawsuits.
Business Income Coverage
This is a type of property insurance that protects your business from loss of income due to disruption of business. The slowdown or shutdown of operations could result from damage to physical property.
Business income insurance excludes typical operating expenses including utilities. It applies during the time required to complete repairs or replacement of damaged property.
As with most insurance policies, this one has certain exceptions. It doesn’t cover acts of war, extreme weather, or government seizure.
Product Liability Insurance
Despite your best efforts to make a high-quality product, there is always the risk of a product malfunction. For instance, a restaurant could sell a meal that triggers an allergic reaction. A children’s toy company could manufacture a toy that poses a choking hazard.
Whatever your niche, a product defect can result in serious injuries or property damage.
This is why it’s so important to invest in product liability insurance. It protects against fallout that occurs if your products or services cause harm to consumers. How your product is designed, manufactured, or marketed can cause harm to consumers. Additionally, you may be liable if someone misuses your product.
You are responsible for making things right and product liability insurance can help in the event of a product liability lawsuit. It covers legal fees, medical costs, business damages, and compensations.
Commercial Auto Insurance
If you use any cars, vans, or trucks to conduct business, commercial auto insurance is a worthy investment. It covers physical damage and liability for situations, amounts, and usage of commercial vehicles. This may include:
- Collision
- Comprehensive coverage
- Property damage
- Uninsured and underinsured motorist
- Medical payments
- Towing and labor
- Rental reimbursement
You can further customize your cover with features like roadside assistance, expanded towing, and new vehicle replacement cost coverage. Every commercial vehicle your business owns must be covered by a commercial auto insurance policy.
Business Owners Policy
This type of business insurance combines liability and property insurance into one cover. It protects your business against financial loss due to things like theft or fire. It indemnifies entrepreneurs from claims that might arise from business operations including personal or advertising injury.
You can talk with your insurance company and have your BOP cover tailored to your needs. You can tack on options like data breaches, and business income for off-premises utility services.
Any business that has a physical location can benefit from this cover. The same is true if there is a chance of injuries, you have private customer data or assets that could be damaged or stolen.
Cyber Liability Insurance
Data breaches and cybercrimes are way too common in this digital era. They are a headache and often lead to penalties for banks, hospitals, retail chains, and even the federal government. But it’s not just the corporations – 55% of small businesses have had at least one data breach.
A cyber breach does more than just damage your computer system. It puts customers and employees at risk, and this is where cyber liability insurance can prove precautionary. It helps compensate for the damage caused by a virus attack, as well as the cost of data restoration.
What Business Insurance Do I Need?
Having the right small business insurance in place can help you avoid major financial loss in case of a catastrophic event or lawsuit. By now, you should have the answer to the question, “What business insurance do I need?” Just remember to talk to your insurance company and find out if they can tailor a cover to your business needs.
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