Starting a small business can be confusing. Not to mention, it can also be costly. Among others, one of the expenses you need to take care of is insurance. Depending on where you live, it can be a legal prerequisite for operation. The specific requirements for small business insurance will vary depending on the nature of your business and the state where you operate, among others.
Without this insurance in place, you could potentially lose your business. So, what insurance does your small business need?
You might need several insurances when starting your business, including general liability, property, commercial auto, errors and omissions, workers’ compensation, health, cyber liability, and product liability insurance.
This article covers some of the most common insurance policies that a small business might need. They can help provide financial security and potentially minimize financial responsibility in case of uncertain circumstances. More so, it can also help reduce business risks, such as the possibility of legal action against the business. However, take note that the specific coverage and benefits can vary from one insurer to another, so make sure to check the terms.
General Liability Insurance
General liability insurance helps against customer property damage and bodily harm. Therefore, if anything happens to a customer while in your store, including damage to their property or personal injuries, your insurance might provide the necessary coverage.
Some of the things that general liability insurance might cover include copyright infringement, advertising injury, lost wages, and reputational harm. Take note, however, that this policy does not cover employee injuries, professional mistakes, and punitive damages.
This policy can help your business to stay afloat even if a customer or another business sues you.
Lastly, having this small business insurance not only benefits you in times of lawsuits. Many people, from lenders to landlords, might require general liability insurance before they can transact with you. After getting this insurance, you will be given a certificate, which you can hang at your place of business to inform others that you are insured.
Commercial Property Insurance
Whether you own or lease your business space, property insurance is one more thing that you might need. Aside from the physical location, the coverage of this insurance could also include office furniture and equipment against theft, vandalism, lightning, fire, hail, and wind.
Sadly, this insurance does not typically cover damage by earthquakes and floods. If your business is in an area prone to natural disasters, you should consult your insurer and inquire about a plan covering such events.
Commercial Auto Insurance
This insurance can be a good choice if your business uses a car, truck, or van. It is important to note that commercial auto insurance differs from personal auto insurance. The latter does not cover a vehicle’s business use.
Without commercial auto insurance, you cannot file for a claim in cases of accidents or damages involving commercial vehicles. Thus, you would have to pay for the damages yourself, which could be quite expensive, especially if you are running a small business.
Errors and Omissions Insurance
Also called professional liability insurance, it can protect a small business against misrepresentation, inaccuracies, professional negligence, and oversight, among others. It can help in covering legal costs, including expenses for judgments and settlements.
There are cases where you might make a mistake in your work, which could lead to financial penalties, and this is where errors and omissions insurance could come in.
If you do not own an errors and omissions insurance policy, you will have to pay your lawyer and all your customers using your own money, which could hinder your business.
Not all small businesses would benefit from this type of insurance. Some small businesses that might need this policy include graphic designers, tax preparers, real estate agents, and interior decorators.
Workers’ Compensation Insurance
Whether it is for a restaurant, demolition company, or salon, among others, it is a good idea to have one that covers medical treatment, death, and disability benefits should an employee get hurt or die while working for you. This can be possible with workers’ compensation insurance, which can be mandatory depending on where you operate your business.
It is important to get this insurance policy regardless of how risk-free your business is because something as simple as a slip-and-fall injury could lead to an expensive claim that you might not be able to afford.
Talent acquisition and retention are challenging. Among others, one thing that can help is to offer benefits that will make job seekers choose your company. A good example of this is attractive health insurance coverage. With the rising healthcare costs, the right insurance can make healthcare more accessible to your employees.
Aside from health insurance, employers can also consider other ways for their employees to save on medical expenses. Health Reimbursement Arrangement (HRA) and Health Savings Account (HSA) are two additional plans that can be offered. Learning about the difference between HRAs and HSAs can help your small business figure out which is more suitable for your needs and budget.
Cyber Liability Insurance
In this day and age, cyberattacks and data breaches are prominent, which is why you need a cyber liability insurance policy. If a cyberattack occurs and customers’ information leaks from your business’s database, they might file a claim against your business.
In a case like this, your insurance can help pay for the costs of this claim. Furthermore, cyber liability insurance could also help cover costs such as reaching out to affected clients and providing them with credit monitoring free of charge.
Product Liability Insurance
If your small business makes products for mass consumption, this can be another great insurance. Truthfully, no matter how many measures you take or how safe your products are, there is a chance that you might get sued for damages.
Product liability insurance can help protect your business in cases of damage caused by products, and the best part about this insurance is that it is tailored to fit the type of product you sell.
Starting a small business is not easy, and it takes a lot of planning and financing. You need to take all the necessary measures to protect your business and your people. Investing in the right insurance policies is one thing that can help. With this article, you should be able to decide what policies would suit your business and which wouldn’t.