Protect Your Assets & Your Business
This guide shows the most common small business insurance on the market. When you buy an insurance policy, the insurer includes several coverages you will need in many cases. Therefore, when looking for insurance for your business, do not choose the first thing you see on the web. Instead, sit down with a sales representative and explain your situation and needs.
Which is the Right Insurance for My Business?
Many types of businesses and insurance exist, but which is right for your business? It all depends on what you want to cover. Each type of insurance helps you protect your assets. Here is a guide to help you make the proper selection.
Most small businesses start with a Business Owner’s Policy or BOP.
This insurance covers three main essential parts of a business:
- General liability insurance
- Commercial property insurance
- Business income insurance
Who Needs a Business Owner's Policy?
Business owner policy is designed for those renting or owning a workplace or requiring general liability insurance. The main reasons why you should get protected with a BOP are to cover the following:
- your location (asset): for example, if you work from home, rent a place, warehouse or storage, and even garages, and something happens or someone falls, you are covered.
- help you with possible lawsuits: it is incredible the number of lawsuits against small businesses, so to avoid losing your assets or paying a hefty medical bill, a BOP will protect you against customers, visitors, or anyone who sues you.
- against employees’ actions against others, like personal injury or property damage.
· your equipment, inventory, or primary resources to keep your business working. - against a data breach or stolen data: this is one of the most powerful essences of this type of insurance. You have seen how businesses suffer some cyber-attack. This insurance will protect you against lawsuits for a data breach.
Depending on the agency or insurance company, the BOP can be adjusted specially to your specifications and needs. It is an advantage for small businesses because it can turn your insurance from generic cover to specific cover. For example, you can add a Professional Liability Insurance Policy if you provide a particular service.
It would be best if you shopped around to verify coverage and prices. Unfortunately, not all agencies offer the same coverage or prices, so take your time to learn and select the best insurance for your business.
Some insurance companies decide to offer customizable insurance because all businesses are not equal or offer the same services.
The main reasons why you should get protected with a BOP are to cover the following:
- Your location (asset): A BOP can cover your business’s premises, both inside and out. This means that if someone is injured on your property, the BOP can help to pay for their medical expenses. It can also cover damage to your property, such as if there is a fire or a flood.
- Possible lawsuits: A BOP can protect you from lawsuits that are filed against your business. This includes lawsuits that are filed by customers, employees, or even trespassers.
- Employees’ actions against others: A BOP can also cover you if your employees are sued for their actions. This includes actions that are committed on or off the job.
- Your equipment, inventory, or primary resources to keep your business working: A BOP can also cover your business’s equipment, inventory, and other important resources. This means that if these items are damaged or stolen, the BOP can help to pay for their replacement.
- Against a data breach or stolen data: A BOP can also cover you if your business experiences a data breach. This includes the cost of notifying customers, repairing your computer systems, and paying for legal fees.
When deciding on insurance, the task is similar to doing a puzzle. Each piece is essential to finish the whole picture.
As mentioned before, each insurance policy offers different coverage. It would be best if you verified with your insurance professional which is the best for you based on the following:
- Industry: The type of industry you are in will affect the types of risks you are exposed to. For example, a restaurant will need different insurance than a construction company.
- Budget: The amount of money you can afford to spend on insurance will also affect the types of policies you can purchase.
- Coverage: The amount of coverage you need will depend on the risks you are exposed to and your budget.
- Risks: The risks you are exposed to will determine the types of policies you need. For example, if you are concerned about theft, you will need a policy that covers theft.
- Your needs: Your specific needs will also affect the types of policies you need. For example, if you have employees, you need a policy covering workers’ compensation.
Let’s get into each of the most general insurance for small businesses.
General Liability Insurance (GLI)
General liability insurance protects businesses against claims involving bodily injury to a third party, damage to the property of a third party, and personal injuries, such as libel or defamation.
General liability insurance is essential for all enterprises, but particularly for those that interact with the general public. If you own a restaurant, for instance, you need general liability insurance to defend yourself against claims if a customer is injured on your property or if your food makes them ill.
The examples of hoverboards and Samsung smartphones demonstrate why general liability insurance is essential. In both instances, products were recalled for safety reasons. If the companies that manufactured these products lacked general liability insurance, they would have been exposed to significant financial liability in the event that someone was injured as a result of using their products.
Remember that general liability insurance does not cover all potential claims. For instance, intentional acts, such as intentionally injuring someone, are not covered. However, general liability insurance can provide enterprises of all sizes with a valuable layer of protection.
Here are a few additional considerations regarding general liability insurance:
The quantity of coverage you require will depend on the scale of your company and the hazards to which it is exposed.
Before purchasing an insurance policy, you should solicit multiple estimates from distinct providers.
Before signing the policy, you should peruse it attentively to ensure that you understand the terms and conditions.
General liability insurance is a crucial component of risk management for companies of all sizes. You can protect yourself from financial liability if someone is injured as a result of your business activities by purchasing a policy.
Commercial Property Insurance
Commercial property insurance is essential insurance if you run your business from home.
It is designed to protect properties or equipment. It can protect either owned property or equipment as well as rent. Here is an example of what can protect:
- Building: The building that your business is located in, including the roof, walls, and foundation.
- Equipment: Any equipment that is used in your business, such as computers, machinery, and tools.
- Inventory: The goods that you sell or use in your business.
- Furniture: Any furniture that is used in your business, such as desks, chairs, and tables.
- Personal property: Any personal property that is used in your business, such as computers, phones, and jewelry.
It is essential to evaluate the terms of your commercial property insurance policy to ensure that you are aware of what is and is not covered. Some policies may not cover specific categories of property or equipment, and others may exclude certain types of losses.
For instance, a policy may not cover property damaged by flood or earthquake, or property that has been stolen. It is also essential to comprehend your policy’s deductible. The deductible is the amount you must pay out-of-pocket before the insurance company will pay for a covered loss.
Property insurance is an integral component of risk management for organizations of all sizes. You can protect your business’s property and equipment from financial loss in the event of a covered loss by purchasing insurance.
General liability insurance is a crucial component of risk management for companies of all sizes. You can protect yourself from financial liability if someone is injured as a result of your business activities by purchasing a policy.
Depending on your location, some insurance companies may require you to purchase additional coverage, such as flood or earthquake insurance. Depending on your requirements, other insurance companies may offer you a variety of coverage options from which to choose.
Consult with an insurance expert to determine the best commercial property insurance policy for your organization. They can assist you in comprehending your risks and selecting the policy that will best safeguard your business.
Business Income Insurance
Business interruption insurance, also known as business income insurance, is an integral element of risk management for enterprises of all sizes. It can protect your business from financial loss if it cannot operate because of a covered loss.
Any event that prevents your business from operating is a covered loss, such as a fire, flood, or earthquake. While your business is unable to operate, business income insurance can help cover your lost profits, as well as the cost of continuing to pay your employees and other expenses.
It is essential to thoroughly examine the provisions of your business income insurance policy to ensure that you comprehend what is and is not covered. Some policies may not cover losses resulting from a power disruption or a labor strike.
It is also essential to comprehend your policy’s deductible. The deductible is the amount you must pay out-of-pocket before the insurance company will pay for a covered loss.
Business income insurance is a crucial component of risk management for companies of all sizes. You can protect your business from financial loss in the event of a covered loss by purchasing insurance.
Here are a few additional considerations regarding business income insurance:
The quantity of coverage you require will depend on the scale of your company and the hazards to which it is exposed.
Before purchasing an insurance policy, you should solicit multiple estimates from distinct providers.
Before signing the policy, you should peruse it attentively to ensure that you understand the terms and conditions.
Professional Liability Insurance
Have you heard of errors and omissions (E&O)?
Errors and omissions (E&O) insurance, also known as professional liability insurance, is designed to cover litigation based on claims related to errors that occurred during the provision of services by your company.
If your business is prosecuted for malpractice, E&O insurance can help pay for legal fees, settlements, and judgments. In addition, it can help cover the cost of rectifying any damage caused by your error.
E&O insurance is essential for businesses of all sizes, but particularly for those that provide professional services, such as attorneys, accountants, and architects. These businesses are more likely to be accused for malpractice; therefore, they must carry E&O insurance to protect against financial loss.
Here are some of the typical coverages of E&O insurance:
Legal fees: E&O insurance can help cover the cost of legal fees if your business is sued for malpractice.
Settlements: If your company settles litigation, E&O insurance can help cover the settlement costs.
Judgments: If your company loses a lawsuit, E&O insurance can help cover the judgment’s cost.
Damages: If your error resulted in property damage or injury to a third party, E&O insurance can help cover the cost of repairing the damage or paying for the injury.
Remembering that E&O insurance does not cover all potential claims is essential. For instance, intentional acts, such as intentionally injuring someone, are not covered. However, E&O insurance can provide enterprises of all sizes with valuable protection.
If you are considering purchasing Errors and Omissions (E&O) insurance, it is essential to speak with an insurance expert to obtain quotes from multiple companies and to comprehend the policy’s terms and conditions.
Workers'
Compensation Insurance
In the majority of states, workers’ compensation insurance is required by law. If an employee is injured on the job and you do not have workers’ compensation insurance, you could face penalties, fines, and even criminal charges.
Regardless of culpability, workers’ compensation insurance provides benefits to employees who are injured on the job. These advantages may include:
The employee’s medical expenses, such as doctor’s visits, hospital stays, and prescription medications, will be covered by workers’ compensation insurance.
Workers’ compensation insurance will cover a portion of the employee’s lost wages if they are unable to work due to an injury.
If the employee is unable to return to their previous position, workers’ compensation insurance will pay for vocational rehabilitation services to assist them in finding a new position.
Death benefits: If the employee dies as a consequence of the injury, the family will receive death benefits from workers’ compensation insurance.
In the event of an injury, workers’ compensation insurance also insures small business proprietors. A small business proprietor can submit a workers’ compensation claim and receive the same benefits as an employee if injured on the job.
It is essential to observe that workers’ compensation insurance benefits vary from state to state. Additionally, it is essential to note that workers’ compensation insurance is not the only form of insurance that small enterprises require. Consider purchasing general liability insurance, business interruption insurance, and property insurance for your small business.
Data Breach Insurance
Customers will be protected by data intrusion insurance if their credit card numbers, social security numbers, and addresses are compromised. This means that if the data is stolen or lost, the insurance will assist you in notifying those affected, providing identity theft monitoring services, and launching a public relations campaign.
Insurance against data breaches is becoming increasingly vital for enterprises of all sizes. As more and more businesses acquire and store consumers’ personal information, the risk of a data breach also rises. If your company suffers a data breach, data breach insurance can help mitigate the resulting financial and reputational damage.
Here are some of the items typically covered by data breach insurance:
Notification: The cost of notifying those affected by a data breach.
Credit monitoring: The cost of supplying affected individuals with credit monitoring services.
Costs associated with developing and implementing a public relations campaign to address the data breach.
Legal expenditures: The total amount spent on legal fees related to the data breach.
Other expenses related to data intrusion include the cost of engaging a forensic investigator.
Data breach insurance does not cover all potential costs associated with a data breach. It does not, for instance, cover the cost of lost profits or consumer litigation. However, data breach insurance can provide businesses of all sizes with valuable protection.
If you are considering purchasing data breach insurance, it is essential to speak with an insurance expert to obtain estimates from multiple companies and to comprehend the policy’s terms and conditions.
Commercial Umbrella Insurance
Umbrella insurance is a type of risk insurance that goes above and beyond what homes or car insurance plans usually cover. This means that if you are charged for more than your basic plans cover, umbrella insurance can help pay for the rest.
For example, let’s say you have a risk cap of $100,000 on your homes insurance. If you are sued for $150,000, only $100,000 of the losses would be covered by your homes insurance. You would be responsible for paying the balance $50,000. But if you also had an umbrella insurance coverage with a cap of $500,000, the remaining $50,000 in losses would be covered by the umbrella insurance.
You can also use umbrella insurance to cover claims that homes or car insurance plans don’t usually cover, like libel, slander, and fake arrest.
It’s important to keep in mind that umbrella insurance is not a replacement for car or home insurance. Even if you have storm insurance, you should still have these plans in place. Umbrella insurance is just an extra layer of security that can help keep you from going broke if you get sued for a lot of money.
Here are some of the things umbrella insurance can do for you:
Higher liability limits: Umbrella insurance can give you higher liability limits than what homes or car insurance plans usually give.
Coverage for claims that aren’t usually covered:
- Increased liability limits: Umbrella insurance can increase your liability limits beyond what is typically offered by homeowners or auto insurance policies.
- Coverage for claims not typically covered: Umbrella insurance can cover claims that are not typically covered by homeowners or auto insurance policies, such as libel, slander, and false arrest.
- Peace of mind: Umbrella insurance can give you peace of mind knowing that you have additional protection in the event of a large liability claim.
If you want to buy umbrella insurance, you should talk to an insurance agent to get quotes from different companies and learn about the policy’s terms and conditions.
Commercial Auto Insurance
This form of coverage is known as commercial automobile insurance. It is designed to safeguard you and your employees while conducting business-related activities in a company vehicle on the road. This insurance protects you against claims of bodily injury caused by your business vehicle. Your automobile (private) insurance will not supplant this coverage. Therefore, there are two types of insurance, one for business and one for personal use.
Typically, commercial auto insurance covers the following:
This type of insurance covers medical expenses, lost wages, and pain and suffering if someone is injured in an accident caused by your company vehicle.
Property damage liability covers the cost of property damage caused by an accident involving your commercial vehicle.
Medical payments: This covers your employees’ medical expenses if they are injured in an accident while operating a company vehicle.
Uninsured/underinsured motorist coverage covers medical expenses and property damage if you are involved in an accident with an uninsured or underinsured driver.
This covers the cost of repairing or replacing your business vehicle in the event of an accident.
Comprehensive coverage protects your business vehicle against theft, fire, and vandalism.
Notably, the specific coverages included in a commercial auto insurance policy will vary from policy to policy. It is also essential to note that the cost of commercial auto insurance will vary based on the scale of your business, the type of vehicles you operate, and the level of coverage you require.
If you are considering purchasing commercial auto insurance, it is essential to speak with an insurance expert to obtain quotes from multiple companies and to comprehend the policy’s terms and conditions.
Product Liability Insurance
Product liability insurance is a form of insurance that protects enterprises against legal claims resulting from faulty products. It can help cover medical expenses, property damage, and legal fees if a customer is injured by a faulty product your company sold.
Typical product liability insurance coverage includes the following:
- Design defects: This covers claims that the product was defectively designed.
- Manufacturing defects: This covers claims that the product was defectively manufactured.
- Failure to warn: This covers claims that the product was not properly warned about its risks.
- Strict liability: This covers claims that the product was defective, even if the business owner was not at fault.
It is essential to observe that a product liability insurance policy’s specific coverages will vary from policy to policy. Importantly, the cost of product liability insurance will vary based on the scale of your business, the types of products you sell, and the quantity of coverage you require.
If you are considering purchasing product liability insurance, it is essential to speak with an insurance expert to obtain quotes from multiple companies and to comprehend the policy’s terms and conditions.
The following businesses should have product liability insurance:
- Retailers: Retailers who sell products to consumers need to have product liability insurance in case a customer is injured by a defective product.
- Manufacturers: Manufacturers who make products that are sold to consumers need to have product liability insurance in case a customer is injured by a defective product.
- Wholesalers: Wholesalers who sell products to retailers need to have product liability insurance in case a retailer is injured by a defective product.
- Distributors: Distributors who sell products to wholesalers need to have product liability insurance in case a wholesaler is injured by a defective product.
Which is the Insurance Required for your Business?
What kind of insurance is best for your business will depend on your wants and situation. An insurance provider can help you figure out which coverage is best for your business based on the risks you face.
Besides worker’s compensation insurance, companies may also need the following types of insurance:
- General liability insurance: This covers your business if someone is injured on your property or if your business is sued for damages.
- Commercial property insurance: This covers your business’s property, such as your building, inventory, and equipment, if they are damaged or destroyed.
- Business interruption insurance: This covers your business’s lost profits and other expenses if your business is unable to operate due to a covered loss, such as a fire or flood.
- Professional liability insurance: This covers your business if you are sued for malpractice.
What kind of insurance your business needs depends on the type of business you run, how big it is, and what kind of risks it faces. Talking to an insurance agent is important if you want a unique proposal for your business.
Here are some more tips to help you choose the right business insurance:
- Get quotes from more than one insurance company. This will help you compare prices and benefits.
- Carefully read the rules: Before buying the insurance, know what it says and how it works.
- Ask your insurance agent if you have any questions about the coverage.
Insurance can be complicated, but it’s important to know your choices and choose the right policy for your business. You can protect your business from financial loss by working with an insurance agent to get the right coverage.
It is highly recommended to read the following article: Small Business Insurance Dos and Don’ts recommended by the Small Business Administration. For more information on business insurance from the SBA, please visit their website.
Disclaimer: The information provided on this website is for informational purposes only and should not be considered legal or financial advice. Please consult with an insurance professional to discuss your specific needs and circumstances.
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