As a small business owner, you may be wondering exactly what type of business insurance coverage you should get or what kinds you need. As with many kinds of insurances, within the realm of business, there are a few different coverages you can have. The question is which makes the most sense for your business? Which do you have to have? And which could you forgo getting, at least for the present? In this article, we take a look at the various kinds of business insurances and determine which might be the best for your small business to look into getting.
Among the more common types of business, insurance is general liability, worker's comp, and auto insurance coverage. You might also consider looking into an insurance policy to cover any equipment that you have and that consequently keeps your company up and running. Often, the equipment utilized by businesses can be pretty expensive. Having this equipment covered by a comprehensive insurance policy could save you a ton of money in the long run.
What Basic Business Insurance Do You Need?
Many business owners will opt to get what is called a Business Owner's Policy. This is a type of insurance that covers both liability issues as well as business property. Keep in mind that on average, businesses will at one point be faced with a bodily injury or property damage claim of 30k. If something were to happen right now and you were faced with that type of cost in light of having to pay for repairs, medical bills, or damage, could you come up with an extra 30k without hurting the business?
Getting a BOP policy, you are covered as far as general liability goes as well as business property. Now, of course beyond these two areas, there will be some gaps that aren't covered by your BOP. This is when you need to look into additional insurance policies for your small business to ensure that you are covered in the event of something unexpected occurring—this is what insurance is meant for after all. If a lawsuit emerges, if you are required to pay damages, if natural disaster strikes, are you prepared to pay for what you need to as you work to recover? Most companies, to this end, will require insurance to protect them in these types of instances.
Different Types of Insurance
General Liability Insurance
Perhaps the most common type of coverage, general liability insurance is usually one that most new businesses will get. A general liability policy is designed to cover bodily injury claims, property damage as well as claims involving libel for example. So let's say for instance that a customer falls in your parking lot and is consequently injured. They then accrue several medical bills/expenses and expect you to pay for it as they are citing that your parking lot was not properly maintained. If you have to pay for these bills out of pocket this could certainly hurt the business. This is where a general liability policy would come into play.
Commercial Property Insurance
Beyond general liability, another common type of business insurance is commercial property. This would protect your physical business location as well as the property contained therein. So for example, items such as tools, furnishings, inventory, and other things of this nature that are important to your business are covered with this policy. If your location experiences a fire, the damage incurred and any property destroyed because of that fire would be covered under this type of business insurance.
Business Income Insurance
If for some reason you have to shut down for some time, whether because of damage, fire, or some other such event, the business income insurance policy would help to offset lost income during this shutdown.
Workers' Compensation
This type of business insurance is relevant to those who have employees working for them. If an employee is injured on the job or has a prolonged illness, worker's comp can help provide needed benefits to them. It will cover such things as medical expenses, disability benefits as well as funeral costs.
Auto Insurance
If any of your employees do drive for you in the process of doing business, then you will want to look into a commercial auto insurance policy for the company. Let's say an employee is using a company vehicle to deliver something and gets into an accident that was their fault—this is when you need commercial auto insurance. And even if your employee is utilizing their car for work purposes or to deliver etc. on behalf of the company, a commercial auto policy will be needed to protect the business should that employee causes damage to another in the course of working and driving.
Data Breach Insurance
In this day and age where cyber-attacks are not uncommon, having insurance specifically designed to cover hacks and data breaches only makes sense. If there should be a breach and your customers' sensitive information gets compromised, having this kind of policy in place can help pay for what might happen during the fallout. For instance, you may find that you have to do increased public relations to help mitigate the aftermath of a hack or breach. This can get costly; data breach insurance can help you cover this cost.
Do You Need Insurance for a Small Business?
This is a question that every small business owner has. There is the added cost of business insurance, which in the early phases of your company especially could seem like a lot given that money is tight. However, if something should arise, some emergency should occur, the cost for dealing with that if you do not have insurance in place could and most likely will be significantly more.
First Union Lending is here to help. We want our clients to thrive and succeed. And in this difficult financial climate, we have solutions that will allow you to make it through! Call today and let's get started together!