Six Types of Insurance for Your Small Business
As a financial professional, you’re probably aware that running a small business can be complicated. Business owners and entrepreneurs typically spend a lot of time marketing products or reviewing financial statements. That means business insurance can get overlooked.
This oversight can be costly because you need the right kinds of insurance to safeguard your company against a lawsuit, a natural disaster, or a workers’ compensation claim. Since you work hard to build a secure future and sound foundation for your clients, it’s worth taking the time to protect it by having the right insurance.
Not only is insurance for small business practical, sometimes it’s mandatory. Depending on the type of small business you own and where you live, your industry or local laws may require you to purchase certain types of insurance. So always be sure to find out what insurance policies may be required.
The following types of insurance can safeguard your business in the event of an unexpected disaster or misfortune:
1. Liability insurance – there are different kinds of liability coverage for small businesses, including:
- General liability insurance – protects against legal claims associated with accidents, injuries, and negligence.
- Product liability insurance – protects against financial loss if you manufacture, wholesale, or retail products.
- Professional liability insurance – protects against malpractice, errors, and negligence claims. It may be required in certain businesses, such as a medical practice or foodservice business.
2. Commercial property insurance – covers your business property in the event of disasters such as fire, smoke, severe weather, and vandalism. Since the definition of commercial property is broad, it’s best to speak to your insurance agent about what’s covered so you customize a policy for your needs.
3. Home-based business insurance – is necessary if you run a business out of your home. Most homeowner’s insurance doesn’t cover home-based business losses.
4. Commercial auto insurance – is required if your business owns vehicles used to transport employees, product, or equipment. . It protects your business in the event of an accident or theft. However, commercial auto insurance doesn’t necessarily cover employee injury in the event of an accident. This is why having workers compensation insurance (explained below) is also important.
If your employees drive their own vehicles for work-related activities (not including getting to or from work), then you can get non-owned auto liability coverage. This protects the company if the worker doesn’t have their own insurance, or is under-insured.
5. Workers compensation – protects you if an employee has an injury on the job. It also protects you in the event of a lawsuit.
6. Business owner’s policy (BOP) – is a package of essential business insurance plans. It typically includes business interruption insurance, property insurance, vehicle coverage, liability insurance, and crime insurance. However, you can adjust coverage for your business needs. Bundling coverages can save you time and money.
Finding the right insurance for your small business depends on many factors, including:
- the type of business you own
- whether you have employees
- whether you work from home, lease a space, or own a space
While there’s no one size fits all solution to small business insurance, these 6 types are likely to cover most small business situations.
However, you should always discuss your small business needs with your corporate office or an insurance agent that specializes in commercial insurance products. Taking the time to research and shop policies is the key to saving time, money, and hassle in the event of a future disaster.
About the Author
Justin Brown is an insurance marketing expert working as the Marketing Content Manager for the Bankrate Insurance companies NetQuote, InsureMe, and AgentInsider. He provides insurance agents and risk management advisors with the latest news and marketing tips to help them grow their business.