Types of Insurance Available for Small Business Owners

Running a small business requires the business owner to take on a significant amount of jeopardy. It’s a risk/reward type of game wherein the business could either one day turn into Amazon or go down in flames like the Hindenburg. Because of this risk, it’s vital that a small business owner protects his or her company by obtaining the right type of insurance plan. Without it, one disastrous event or liability suit could sink the ship before it ever had the opportunity to make sail.

If you’re a small business owner, it’s your responsibility to safeguard your company. Therefore, finding the correct insurance coverage should be the first priority on your list. Naturally, you may wonder but what small business insurance do I need? Read on to discover the policies you should strongly consider obtaining.

Types of Insurance Available for Small Business Owners

There are a variety of small business insurance policies that you can choose from to mitigate any potential small business risks. The following are just some of the policies you should strongly consider:

• General Liability Insurance – Protects a business from liability claims related to defective or misleading products or services that may have caused bodily injury or property damage.
  • General liability insurance is a must-have for all small businesses
  • Each policy will look different and depend on the business’ needs and the industry
• Property Insurance – If you own or rent a building or have expensive equipment, inventory, or tools, you’ll need to have property coverage. This liability coverage protects inventory, equipment, furniture, etc. from any of the following:
  • Fires
  • Smoke damage
  • Vandalism
  • Theft

• If you live in an area that has mass-destruction cataclysms such as tornados, floods, and earthquakes, you’ll typically have to purchase specialty insurance for those things. In addition, a standard property insurance policy won’t cover business interruptions or loss of earnings; you would have to purchase business interruption insurance. Consider speaking with your insurance company or other business owners in the area to see what’s recommended.
• Workers’ Compensation – Workers’ comp covers employees who are hurt in the line of duty. Even if it’s an accounting firm, one slip in the office could result in hundreds of thousands of dollars of medical expenses bills. A worker’s comp agreement accomplishes the following:
  • Gives medical benefits and coverage for injured employees
  • Provides wages to employees who are hurt and unable to work
  • Prevents employees from suing their employer
• Although laws vary from state to state, most require a business owner to have workers comp if they have W2 employees. Failure to obtain workers’ compensation can result in serious penalties and fines, not to mention expose the business to possibly crippling liability.
• Vehicle Insurance – Commercial auto insurance is meant to protect your company’s vehicles and drivers that transport:
  • Employees
  • Equipment
  • Products
• A vehicle insurance policy will protect your vehicles, employees, and equipment from damage or collisions. If your employees operate their personal vehicles for company business, you may want to consider getting non-owned auto liability to protect your small business from the chance that your employee has improper or inadequate auto insurance.
• Professional Liability Insurance – Also known as Errors and Omissions (E&O) insurance, covers defense and damages for inadequate or botched professional services. Many small business owners make the mistake of believing that their general liability insurance will cover all damages or issues; however, if they’re a professional business, that isn’t the case. Examples of professional occupations include:
  • Consultants
  • Lawyers
  • Accountants
  • Real estate agents
  • Beauticians
  • Masseuses
  • Insurance agents
  • Technology providers
  • Hair stylists
• Home-based business – Naturally, many small businesses begin out of the home. What many owners fail to understand is that homeowners’ insurance policies do not cover home-based businesses in the same way as commercial property insurance. Without it, your equipment or inventory could be irrevocably lost in the case of fire, theft, or other types of damage.
• Business Owner’s Policy (BOP) – Business owner’s policy is a form of umbrella coverage that packages all the typical coverages a small business owner would require. This often covers:
  • Business property insurance
  • Vehicle insurance
  • Liability insurance
  • Business interruption insurance
  • Crime insurance
• Depending on your company’s needs and liabilities, you may save money bundling the services as opposed to purchasing them individually.

Starting Your Business

Building your company from the ground up is hard work that’s made all the more difficult by having improper insurance policies in place. Attempting to run a business without it is imprudent at best and illegal at worst. Therefore, it’s essential that you obtain the right insurance for your small business.

If you need help with any sort of insurance coverage, NOW Insurance has you covered. Reach out today and a professional insurance agent will be standing by to help you get started.

Sources

1. Clade, S. Simon, Peragine, Smith & Redfearn LLP. Worker’s Compensation Insurance – A Necessity. https://www.spsr-law.com/index.php/news/48-workers-compensation-insurance-a-necessity
2. Frankenfield, J. Investopedia. Errors and Omissions Insurance (E&O). (2019). https://www.investopedia.com/terms/e/errors-omissions-insurance.asp
3. Lesonsky, R. Forbes. Business Insurance: The Safety Net Your Small Business Needs. (2018). https://www.forbes.com/sites/allbusiness/2018/12/06/business-insurance-safety-net-your-small-business-needs/#5f0962ce319f