You’ve worked hard to establish and grow a small business, attracting and retaining clients, balancing your books, paying your taxes and making a name for yourself in the local community.
According to Insurance Journal, four out of 10 small businesses are likely to experience a property or general liability claim in the next 10 years. Don’t let unexpected accidents, damages or lawsuits threaten everything you’ve worked for. Protect your achievements and assets—take this crash course in Small Business Insurance 101, and learn how budgeting for protection is crucial.
Depending on your location and size, most small businesses are required to purchase four types of insurance:
- Liability Insurance pays damages if you’re found liable for causing harm through a defective product, faulty service, hazardous environment or disregard for another person’s property. Damages awarded may cover your legal fees and the medical bills of injured parties.
- Property Insurance covers a structure as well as furnishings, inventory, machinery, electronics, materials and the like following common threats like fire or theft. It can also provide funds to get you operating again during tough periods of transition after a catastrophic loss.
- Commercial Auto Insurance provides coverage for vehicles owned by your business (often not covered by personal auto policies).
- Workers’ Compensation Insurance is required by businesses employing a certain number of workers. It covers medical bills and lost wages if an employee is injured on the job. In the event of death, it provides coverage for the surviving family.
When Life Calls for More than Minimum Protection
Insurance is like SPF—different types of businesses require different levels of protection. Separate policies for various circumstances are often available through your agent. They include:
- Umbrella Liability policies protect against unusually high losses, if the limits of an underlying policy have already been reached.
- Errors and Omissions Insurance/Professional Liability Insurance covers situations in which your business is sued as a result of services offered like advice, recommendations, designing products, providing physical care or tending to the needs of others. It covers—up to the policy limit—any legal judgments and legal defense bills.
- Employment Practices Liability Insurance pays for damages to a worker whose civil or legal rights have been violated by an employer.
- Cyber Liability Insurance provides coverage for businesses that fall prey to data theft, including the costs of notifying or compensating customers whose information has been compromised.
- Terrorism Insurance has changed since the 9/11 World Trade Center attacks, and will often need to be purchased separately.
Many agencies combine coverages into a single contracted package, often at a lower premium than if the coverages were purchased individually. With the information provided here, you can have an informed discussion with your insurance agent about their available options, and their recommendations for the needs of your particular business.