Covering your business with insurance is essential to protecting you from costly claims. A company that does not have liability and other forms of business insurance could be at risk as a result. Property damage, bodily injury, or other possible issues for your company can come at a high cost, but a business insurance policy can help you cover potential expenses. When looking at business essentials, a vital question to ask yourself is: “Do I need business insurance?”
Types of Business Insurance
Companies of every size should have adequate coverage. Every business is different, and because of this, there are several different types of insurance. If you are looking for insurance for your business, you should consider:
- Professional liability
- Workers’ compensation insurance
- Property insurance
- Vehicle insurance
- Product liability coverage
Professional Liability Insurance
Professional liability insurance covers your company against claims for mistakes or harm caused by a failure. Sometimes known as errors and omissions insurance (E&O), the policy is customized to each particular industry.
Worker’s Compensation Insurance
From the moment you take on your first employee, you should add worker’s compensation to your business policy. This policy is essential as it covers everything from medical treatment to death benefits. If something happens to an employee as a result of their work duties, your plan will cover this. Your company may only carry out low-risk activities, but you will be liable for everything from simple slips and falls to death, so this coverage is vital. Worker’s compensation is a legal requirement in most states.
Vehicle Insurance
If you are going to use vehicles for your business, you should get coverage for them. Business car insurance or van and truck coverage will take care of any liability in the case of an accident. A fully comprehensive coverage plan is the best option, but you should have at least third-party coverage.
Product Liability Insurance
When you produce a product for sale, you should take out product liability insurance. Your product may have gone through every conceivable safety test, but could still be the subject of a lawsuit. A product liability policy is adapted to suit a particular product.
Other Business Insurance
Some other types of business insurance could also apply to you. A home-based business will require additional coverage on a home insurance policy. Standard homeowner’s insurance will not cover any business activities performed in your home. Self-employed health insurance is advisable when you have no corporate policy in place to cover you.
If an instance occurs when your company can’t operate, such as a natural disaster, a business interruption policy will cover this. For retail, manufacturing, or sales businesses, downtime can be extremely costly. Being unable to produce or sell stops your revenue and will affect your ability to pay employee salaries. A business interruption coverage policy will cover these costs until you get up and running again.
Health insurance for employees may be something you wish to offer, or there may be another business liability insurance policy applicable to your company. Choosing the right insurance is the best way to protect you and your business. Be sure to take a look at some handy tips on dos and don’ts for small business insurance.
Mandatory Insurance for Businesses
There are some types of insurance that you are legally required to have. These cover yourself, your full-time employees, part-time staff, and your business. Your state will set the requirements for any insurance coverage you must have. Local city government offices will have a Department of Insurance or an office that can help. Be sure to find out the full requirements for business insurance in your state.
At a minimum, the majority of states require you to pay for Worker’s Compensation coverage. Unemployment and disability insurance are often legal requirements too. Covering your business for every possible scenario will protect you from significant financial risks. Depending on the industry you are in, whether you have employees, and the equipment you use, your insurance needs will vary.
What is a Business Owner’s Policy?
When looking for the right business insurance, you could consider a business owner’s policy (BOP). As a comprehensive insurance policy, this insurance encompasses several different types of coverage. It can be a more simple solution but can come at a higher price. The insurance covers the majority of the basics you will need to have as a business owner. Typically covering liability, property, and business interruption, it can be a one-stop solution.
Something to consider about this type of business insurance is whether it has absolutely everything you need. Despite this type of insurance being comprehensive for small to medium businesses, it might not cover your particular business activity. If you are in a specialist industry or require vehicle coverage, you will have to seek out additional coverage.
The Small Business Administration has some guidelines on what you should consider when looking at a Business Owner’s Policy.
Do You Need General Liability Insurance?
General liability insurance coverage will protect your business as well as yourself from claims filed as a result of injuries or property damage. This type of insurance will usually cover claims for property damage or bodily harm against your company, services, or products.
General liability is a good buy for most business types, although it does not usually cover employee injuries, professional mistakes, and some other instances. It is not currently a requirement to hold this type of policy by law, but protecting yourself as much as possible is advisable for any business owner.
Can You Run a Business Without Insurance?
While some business insurance is optional, there are some types of coverage you must acquire. A lot of these necessary policies relate to employees, so you will need them as soon as you hire your first worker. Worker’s compensation insurance is required insurance in a lot of states. Disability and unemployment insurance could also be a minimum requirement for businesses, depending on your operating location.
When you have these types of insurances, you are protecting yourself against claims from employees. Should a worker become injured or sick while working for you, these policies protect you and your business. Whatever the injury or short-term disability, workers’ compensation will have your company’s back.
E-Commerce Business Insurance
With the rise of online business, e-commerce business insurance has been adapting to cover an ever-evolving list of online company types. If you are running an online store or service, your business has different challenges to those of traditional companies.
Your business model will be different, so your commercial insurance will be different too. Even if you are only starting with your e-commerce journey, insurance is something you should consider, because minimizing risk to yourself and your business is always a good move. If you have a large amount of stock, send out products, or provide services, you are at risk of lawsuits or other disasters.
You may have homeowner’s insurance, but it will not cover large amounts of goods you may be storing. If you have expensive computer equipment or hold payment details for customers, you need to protect everything. Some of the types of insurance you should have for online businesses include:
- Liability insurance
- Property insurance
- Transit coverage
Liability Coverage
Even if you are only a small business, liability coverage is advisable. It can cover you against someone hurting themselves while using one of your products. Claims, no matter the reason, have to be dealt with, and that comes with costs. Liability insurance will cover legal fees incurred while defending against any claim, even if the claimant is unsuccessful.
Property Insurance
Your homeowner’s policy or renter’s insurance will cover your personal property, but it is not likely to protect your business. Inventory and any equipment used in conducting your business should have a separate policy to your homeowner’s coverage.
Transit Coverage
If you send out large amounts of goods to third parties, you will need transit insurance to cover them. Your inventory may be covered when it is on your premises, but not when it is on the move, so this is something you need to evaluate.
Cyber Insurance
A meteoric rise in cybercrime has created the need for insurance companies to offer a new type of insurance. Cyber liability insurance is a type of insurance you may want to have for your business. Data breaches can have a devastating impact on a business. An attack may not only devastate your reputation but can also affect you financially.
Cyber attacks are becoming more sophisticated, with hackers causing significant damage and data breaches. When a company is the subject of cybercrime, it can be challenging to recover as a result. Financially, a cyber attack on your business can be a big blow. A cyber insurance policy will cover you and your business from claims that could occur if you suffer a data breach.
A cyber liability policy can cover:
- Business interruption
- Investigation costs
- Breach notification costs
- Legal expenses from potential lawsuits
- Fines from regulatory bodies
An extensive plan may also include coverage for your business against cyber extortion or ransomware. You can make sure your systems have the best security software, but insurance is extra protection. If you believe that your systems are at risk, covering your business with a cyber policy should be your next move.
Specialist Business Insurance
Specific industries and fields of work will require specialized business insurance coverage. General business insurance policies will cover most things, but a dedicated plan is best in some circumstances. An experienced insurance agent will be able to help you understand the unique needs of your business. A specialist business insurance policy may have to include a tailored public or product liability system. Certain activities may be a higher risk for causing personal injury, meaning they require specific business activity insurance. Your insurance professional will advise you on what is applicable.
Examples of companies or activities that should have specialist insurance include:
- Chemical industries
- Events companies
- Food manufacturing
- Energy contractors
- Consultants
- Personal trainers
- Architects
- Engineers
- Construction companies
Finding the Right Business Insurance Company
Choosing the right business insurance company can feel overwhelming. There are a lot of companies out there offering business coverage policies. When you are ready to buy insurance, there are multiple factors you should consider.
Here’s what will help you find the right business insurer:
Reputation
Speak to other people in your industry who may have experience with business insurance companies. Find out who they have been using; their experiences will be invaluable. If a company is known for providing excellent service and support, it is wise to give them serious consideration. If a company has experience with small and mid-sized businesses, they are likely to be more approachable.
State Licensing
An insurance company has to have a license in the state they are selling their insurance policies. Your state department will be able to provide information on licensed brokers in your area.
Cost
When it comes to insurance, price is an essential factor. Cheap insurance premiums do not necessarily mean you are getting good value for your money., so comparing the policy cost is not the only thing to consider. The cost of a policy will be important, but the level of coverage is what should be your priority.
Making a Claim
If you are subject to a lawsuit or other action, you will have to make a claim on your business insurance. Before taking out a policy, it is advisable to look at the claims process. Is making a claim straightforward and uncomplicated? A long drawn out or complicated claims procedure will only add to the stress of needing to use your insurance.
The Right Business Insurance Will Lead to a Smooth Operation.
Whether you are a small home-based business or an expanding corporation, having the right business insurance is of the utmost importance. A claim against you, your business, or an employee can have huge implications. Having the best business coverage you can afford will secure your company’s future.
Work with an insurance agent that has experience in your industry. They will be able to advise you on the best policies and what coverage you should have. You can also find lots of useful information from your state department or via local trade organizations.
Are you currently looking into getting business insurance quotes? Are you unsure about what you need to cover yourself and your company?