If you are a small business owner, it is wise to buy insurance coverages to customize your policy based on your specific operation and needs.
Since you assume responsibility for your employees and customers, you will need business protection from business insurance that protects you financially from some of the consequences that your business activities might affect your stakeholders in serious and costly ways. Simply put, insurance does not only protect your business but others as well.
What is a Small Business Insurance?
Small business insurance is a form of business protection, sometimes called commercial insurance and team monitoring software it helps protect significant aspects of a business such as assets, property, and income.
The Insurance Information Institute reports that “insurers often combine a number of insurance coverages into a package that is sold as a single contract.” The most common policy for small business owners is the Business owners policy (BOP) which covers:
- All major property risks
- All major liability insurance risks
- Additional coverages depending on the operation of the business
4 Major Coverages or Types of Insurance for Small Businesses
This type of insurance covers the loss or damage of property due to common perils such as fire or theft. Insured property includes:
- Building or structure
- Office furnishings
- Raw materials
- Other items valuable to the operations of the business
Some policies also include coverage for the breakdown of equipment, removal or clean-up of debris after a fire or a destructive event, some types of water damage, and other losses from unforeseen events.
Liability insurance covers damages for which the business is found liable, up to the limits of the policy like medical bills of people injured, if any, or on the premises of the business, including attorney’s fees and other expenses incurred for legal defense in the case that an enterprise is sued for reasons such as:
- Customers claim they were caused harm for a defective product, error in service, or disregard for another person’s property
- The business created a hazardous environment.
Business Auto Insurance
Business protection insurance also offers coverage for autos owned by a business. With insurance, your business can get covered for costs to third parties resulting from bodily injury or property damage that the business is liable to, as long as it is within the limits of the policy.
Workers Compensation Insurance
For small businesses with a certain number of employees, like three to five, some states require that a business owner who is also the employer should have workers compensation insurance. This covers:
- Medical care
- Replacement of lost wages for an employee who is injured in the course of employment (regardless of who was at fault)
- Compensation for the family of a worker who dies as a result of injuries sustained while working
Additional Business Insurance Coverages
There are additional coverages that you can add to your business protection insurance policy. This will depend on how much you can afford to pay and the needs for the specific type of operation your business uses:
- Errors and omissions insurance (also called miscellaneous professional liability insurance)
- Data compromise coverage
- Employment practices liability coverage
- Outdoor property coverage
- Directors and officers insurance
- Homeowner’s insurance
- Renter’s insurance
- Personal umbrella insurance
Finding a business Insurance that Meets Your Needs
You can easily search online for business insurance but it is wiser to talk to people in your industry who’ve been there before you and ask for recommendations.
The rates for business protection policies vary as with the required business insurance policy in certain states. Some states require additional insurance apart from what is required by the law.
Find a broker who specializes in your industry to get appropriate coverage at an advantageous rate, who can also guide you in understanding the details of what you’ll need in your policy.
Buying Business Insurance
As you consider business protection that will cover costs of damages of events that you do not have control over, The U.S. Small Business Administration recommends steps in buying business insurance
- Assess your risks
- Find a reputable licensed agent
- Shop around
- Re-assess every year
With business protection that matches the needs of your business and provide protection for your business as it grows, insurance is a strategic decision that is worth your investment. Remember that it is not cheaper to forego insurance when you need it and wish you’d had it.