Regardless of business type, size, or location, small businesses need insurance. In addition to insuring business assets, small-business owners are also protecting their personal assets and their reputation. As well, many states require small businesses to carry certain coverage, and for some businesses (such as building contractors), even customers may want proof of insurance coverage.
If you’ve previously passed on coverage because of the price, think again. You’re risking bigger costs if your business is found liable for a large loss.
Your agent can help you navigate the various coverage options available. But your first step is to decide what you want covered, what you need protection against, what losses and risks your customers face, and what risks or losses your employees face.
Small business insurance consists of three main components: liability insurance; coverage for property and buildings; and coverage for business equipment and other contents. The following are some types of available coverage:
Employer’s liability insurance:
Legally, businesses with more than one employee must carry this coverage. It provides protection for costs incurred (including damages and legal fees) if an employee becomes injured or ill as a result of his or her job.
Public liability insurance:
If your business regularly comes into contact with the public, this provides protection in the event that they or their property are injured or harmed in some way. This is essential if customers visit your business premises.
Professional indemnity insurance:
Mistakes causing financial harm to a customer or client can happen in a number of professions. Also known as errors and omissions (E&O) insurance, this covers claims or legal costs incurred if this transpires.
Key man insurance:
If an employee vital to your company’s success dies or is seriously injured and unable to work, key man insurance helps cover what the loss of this individual would cost your business. A coverage amount is decided before a policy is purchased by determining potential losses stemming from that employee’s absence (say your top salesman is injured). This may be hard to quantify, and the amount you’ve settled on may be insufficient, but at least there’s something there to compensate for the loss.
Business interruption insurance:
If a disaster causes you to shut your doors for an extended period of time, the losses could sink your business. This policy will allow you to return to original operation levels.
Commercial vehicle insurance:
If you or your employees drive company vehicles, this is required by law. The right coverage depends on the vehicles, and how often and how they’re used.
Insurance for property and buildings:
Business property damages and losses due to fire, lightning, riot, explosions, malicious damage, storms or floods, or vehicle damage is covered by most commercial policies.
Business contents insurance:
As seen, your property and building coverage for physical locations provides protection for buildings themselves-not their contents. This covers content losses inside your building and includes anything that would fall out if you turned it upside down.