Running any business entails dealing with some level of risk, and that’s why most businesses have business insurance. Different kinds of insurance shield businesses from liability against losses, injuries, death, and litigation.
There are many types of business insurance that business owners can settle for. The type of insurance depends on the business’s unique needs and its financial situation. Businesses that secure the right policies register consistent growth and profitability.
In today’s post, we’ll be highlighting the most common small business insurance policies you should consider for your business.
Table of Contents
1. General Liability Insurance
General liability is the most common type of insurance for businesses of all sizes. This insurance covers injuries and medical expenses when your employees get injured on the job. It covers most physical incidences that your employees can hold you legally accountable for.
If your employees’ personal injury clause also covers property damage, then general liability insurance also takes care of it. Some general liability policies also cover slander and defamation. General liability is a comprehensive insurance type that a business can’t do without.
Contrary to popular thought, the law doesn’t require businesses to have general liability insurance. However, it’s a good idea for brick-and-mortar firms to get the policy so they can stay afloat if the unexpected happens.
2. Workers’ Compensation
Workers’ compensation insurance is mandatory in all states except Texas. However, the worker compensation legal conditions vary by state. For instance, in some states, only companies with a certain number of employees are required to have workers’ compensation.
Worker’s compensation provides coverage for workers when they get involved in accidents that amount to physical injuries. Workers’ compensation also covers work-related illnesses, for instance, due to exposure to harmful chemicals.
Workers’ compensation policies cover:
- Medical expenses
- Lost wages
- Disability benefits
- Death benefits
Workers’ compensation also shields businesses from legal lawsuits, which could financially ruin a company. This type of insurance is especially important for contractors and those in the mining industry. That’s because their workers have to work in hazardous conditions with a high propensity for accidents.
Having proper workers’ compensation is a contractual obligation for most clients when looking for contractors. These clients don’t want the legal system to rope them in should something happen to one of the workers.
3. Professional Liability Insurance
Professional liability insurance is also known as error emissions (E&O) insurance. This sits right next to general liability insurance with the other must-have insurance policies for businesses. This insurance shields a company from liabilities arising from negligence, failed services, or incomplete services.
This insurance also covers stuff like misinterpretation, bad advice, and losses that clients link to your services. Lawyers, designers, accountants, and consultants should consider getting this type of insurance. It throws them a lifeline when things start to go downhill.
4. Product Liability Insurance
Does your business sell any physical products? If so, you should consider getting product liability insurance to safeguard your business. Product liability insurance shields you from liability when products you manufacture, sell, or distribute end up causing injury, damage, or loss.
It’s worth noting that this insurance isn’t exclusive to the product manufacturer alone. Everyone down from the supplier of the raw goods to the end retailer should consider getting this type of insurance. A single lawsuit could bring down your entire business.
If you don’t have product liability insurance, you’ll have to pay out-of-pocket damages to lawsuit claimants. That’s a lot of money down the drain for something that’s probably not your fault.
5. Commercial Property Insurance
If you own a brick-and-mortar business, it’s a good idea to get commercial property insurance. Whether you own or rent your business space, any damage to the premises can be very detrimental to your business. Commercial property insurance protects your business from losses because of theft, vandalism, fire, and other incidences within your business premises.
However, it’s worth noting that commercial property insurance only covers up to the policy’s limit. Anything above the policy limit is completely up to you to take care of. That’s why most businesses complement property insurance with other policies for the greatest effect.
Because commercial property insurance is a high-value policy, getting a claim from your insurer can prove a tad challenging. Most businesses seek legal help for commercial insurance claims to get the compensation they deserve.
6. Unemployment Insurance
Employees are the backbone of all types of business. Employers must look after their employees to take their businesses to greater heights. Unemployment insurance is a type of insurance where the insurer pays the worker every week for a certain period should they lose their jobs.
Most businesses get unemployment insurance as an incentive to attract employees in a scarce labor market. Employees must meet certain eligibility conditions before they can qualify for this insurance. This is an excellent insurance policy if you wish to get an edge over the competition and get the best talent in your niche.
7. Cyber Insurance
Did you know that data breaches cost companies in the US an average of $8.19 million every year? What’s more, according to Cybergovernance UK, 66% of companies never recover after a cyber-attack. If your business does any activity online, you need to consider cyber insurance.
8. Business Interruption Insurance
This is one of the lesser-known business insurance policies. The policy offers compensation for when you can’t open your business for a given period. However, you need a valid reason for closing your business for the said period.
Common Types of Business Insurance Made Easy
Now that you know the common types of business insurance, it’s time to pick the right ones for your business. However, remember to think carefully about the insurance options you settle for and their respective insurance providers. Steer clear from ridiculously cheap insurance policies; you’ll most likely get what you pay for.
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