Small business owners should always prepare for the worst. Accidents in the workplace such as slips and falls, damage to property, and negligence can happen. Because it’s impossible to monitor your employees round-the-clock, especially those deployed in fieldwork, it’s advisable to get insurance to protect your business against legal liabilities and expenses.
For the small business owner, choosing the right insurance is vital.
Buying up every different type of insurance plan out there is not cost-effective, it’s impractical and, in all likelihood, will have you doubling up on certain types of coverage.
Not having enough coverage is likely to bankrupt you. Here are five essential types of insurance that should keep you covered.
1. Business Owners Policy Insurance
First on our list is BOP insurance. This is an absolute must as it alleviates the time consuming process of searching out for every essential piece of coverage that you need. Business owners policy insurance is designed with small businesses in mind.
To qualify, you have to have fewer than 100 employees and less than $1 million in revenue. Should you exceed these figures you will find that you will have to start looking for separate insurance.
The beauty of BOP insurance is that there are customizable bundles designed for what you require. So all the types of insurance you may have seen on lists similar to this are packed up under one policy. Most packages include:
- Property Insurance: This insurance coverage protects your equipment and physical goods against any loss from fire, theft, and other perils.
- Medical Payment Insurance: This coverage pays medical costs due to an accident.
- Equipment Breakdown Insurance: It covers damages brough about by internal forces, including power surges, mechanical breakdowns, electrical shorts, motor burnouts, and operator errors. Equipment breakdown insurance also covers computers, but not software.
- Employment Practices Liability Insurance: It covers a small business against workers claiming that their legal rights have been violated.
- Loss of Income Insurance: This type of business interruption coverage doesn’t include a coinsurance clause. It limits recovery to loss sustained during a certain period after the damage loss, usually about 120 days. It includes continuing expenses for payroll, mortgage payments, and taxes. Also, it helps replace net losses and advertising or relocation fees if you need to move to a new or temporary location.
- General Liability Insurance: General liability insurance, also called commercial general liability insurance or business liability insurance, protects your small business from claims. These claims either involve property damage or bodily injury that may occur during normal business operations. For example, if a client or customer got into an accident while inside or while shopping in your business establishment, general liability insurance covers medical expenses. If your employee accidentally damaged anything while working at a client’s home, this insurance covers the repair costs. General liability insurance also covers legal expenses when you need to defend your small business, which includes settlements and judgments from a lawsuit.
- Data Breach Insurance: This covers the costs related to the leakage of business data due to an employee leaking information, or because of a cyber-attack or hacking, thereby protecting a business’ financial interests.
Of course, some of these might not be relevant to you or there may be other types of insurances that you can add on to the policy. But it seems clear that business owners policy insurance is an absolute must have.
2. Commercial Auto Insurance
If your business depends on vehicles then this also is a must (and rarely covered by BOP insurance). Similar to personal auto insurance, commercial auto insurance covers you for bodily injury, property damage, medical payments, physical damage to name but a few. The difference between personal and commercial policies include things like eligibility, exclusions and limits. Put simply, the risks are too high to be relying on your personal auto insurance for comprehensive cover.
3. Worker’s Compensation Insurance
As an employer, you are legally obligated to ensure the wellbeing of your employees. If, in the event of an accident, you are not covered you could find yourself liable for thousands possibly millions of dollars. Unfortunately, accidents can happen and it is vital that both employer and employee are protected.
For the employee, workers compensation insurance will make sure that medical bills are covered and that they are appropriately compensated for loss of earnings. In terms of the employer, workers compensation helps ensure that they are protected from lawsuits by the victim. It is worth noting that workers compensation insurance differs slightly from state to state, so be sure you know the systems in place relevant to where your business resides.
4. Professional Liability Insurance
Professional liability insurance is another key insurance to have on your list. There may come a time (and it’s very likely to happen) that a client is unsatisfied with the services that you have provided them or you may receive threats of lawsuits from companies in a similar field. As a small business owner, you are protected by any claims, alleged or otherwise, of professional malpractice. Coverage includes things like possible negligence, defense costs, copyright infringement or claims made by temporary staff and independent contractors.
5. Personal Life Insurance
You may be wondering how this might link to your business but a personal life policy protects your assets and business property If the business is then passed on to someone else. It also allows for a smooth transition of the business to be passed on from you to your business partner or whoever you wish to take your place. It isn’t something that any of us like to think about but without any personal life insurance, there may not be any income to ensure that the operation of your business continues.
At the end of the day, not having a fully comprehensive list of coverage puts you, your employees and your family at risk. With these five insurance types you can be sure that you are covered for virtually every eventuality.