If you run your own business, you are no stranger to the passion and hard work it requires. You invest your time, money, and other personal resources. Understanding your small business insurance needs is very important. The proper insurance coverage will protect yourself, your employees, and your product or service.
In addition to lowering your risk and protecting your business and livelihood, there are other scenarios to consider. Prospective clients may require you to have insurance before doing business with you. Insurance may be necessary if you plan to host any events or join events hosted by others. It may be needed if you are renting commercial property. Sometimes, proof of insurance may be mandatory if you are trying to secure a business loan.
Here are seven insurance coverage types all small business owners should consider:
General Liability Insurance
The first type of insurance you want to consider as a business owner is general liability insurance. It will protect you from claims against your business, such as property damage and personal injuries resulting from your premises, operations, or products. Even the smallest business is not safe from having someone take legal action against you.
Business Interruption Insurance
No one likes to think about their business being interrupted. However, a weather event, power outage, flooding, or vandalism could force you to close your doors, losing sales and revenue. Business interruption insurance helps you cover your loss of income. It will also protect your business’s day-to-day operating expenses.
Product Liability Insurance
If your small business manufactures or sells a product, you are responsible for what you sell. Product liability insurance is essential. If your product causes a personal injury or makes a person ill, you could be found liable. There are many reasons why an accident might occur when someone uses your product. A few examples are manufacturing flaws, design defects, and insufficient warning labels.
A product liability insurance policy will provide you with coverage for legal representation and court costs. It will also help if any damages are awarded to another party because of an issue with your product.
Professional Liability Insurance
If you are a professional providing a service or offering advice to clients, you need professional liability insurance. Legal matters can arise without warning. You might make a mistake and find yourself with an unsatisfied customer. Of course, no one wants these things to happen, but many issues can arise in a service-based business. Professional liability insurance will protect you against financial loss arising from lawsuits if you are found guilty of negligence.
Cyber Liability Insurance
In today’s digital landscape, cyber liability coverage is a must. Almost every business is at risk from cybercrime. If you conduct any portion of your business online, chances are you possess sensitive information in the form of electronic data. Because data is not considered tangible property, cyber breaches are often not covered under your general liability policy. This means that you may be unable to recover any loss incurred due to a hacker, a computer virus or even simple human error.
Commercial Property Insurance
Loss or damage to your business location can be devastating and bring your business operations to a standstill. A commercial property insurance policy will protect your business in the event of a fire, wind, storms, or flooding. A policy will also cover your equipment and any other physical assets such as supplies, furniture, inventory, and other building contents used to run your business.
Commercial Auto Insurance
Your personal auto policy is not adequate when you own a business. A commercial auto insurance policy covers any cars, trucks, vans, or trailers used for business purposes. It will protect you if you go out on sales calls or allow employee use of a company vehicle.
It will also provide coverage for any goods, equipment, or supplies you are transporting. Even only occasional use requires a valid policy. A few examples of commercial auto policies available include business use, business use for multiple drivers, and commercial use only.
What Types of Small Business Insurance Should I Get?
There are many categories of small business insurance. The type you will need depends on the type of business you own. It will also depend on its size, the industry you are in, whether you provide products or services, and many other factors. While it may not be legally required, operating a small business without adequate insurance is a considerable risk. One loss could force you to close your business if you don’t have protection.
Running a small business is more than just a full-time job; it’s a part of your life. Understanding the world of insurance is essential to ensure you have the best policies for your needs. This way, you will have peace of mind that your business is adequately protected if the unexpected occurs.