Small-business owners must be bold, innovative, business savvy, and…protective. Owners bravely put themselves out there in a world of business that involves many risks. Surrounded by potential financial damage, business owners must have the proper insurance coverage in place to protect themselves and their company. Following are the 12 essentials:
Liability insurance: If your business is sued by someone claiming that your company caused them harm, this policy covers damages, including attorney fees and medical bills. Several liability policies offer coverage for more specific circumstances, such as:
Errors and omissions insurance (E&O)/professional liability insurance, which covers liability for recommendations, advice, product design, or physical care. E&O will cover your business if a customer claims you have failed to perform your job properly and, as a result, the customer was harmed in some way.
Employment practices liability insurance (EPLI) pays damages if you are liable for violating an employee's rights. It covers legal fees as well as judgments against you.
Directors and officers liability insurance (D&O) protects company leaders from lawsuits claiming their management of the business violated the rights of others.
Business identity theft insurance: If your business suffers from data theft, this policy covers your legal liabilities. It also provides coverage for costs associated with notifying customers and recovering compromised customer information.
Commercial vehicle insurance: If you use any vehicles for your business, this policy covers damage to the vehicle as well as costs to third parties due to injury or damage caused by your vehicle.
Personal auto insurance: In addition to your business vehicles, you likely have an automobile of your own. You'll also need proper coverage for this vehicle. If it's used at all for business, check with your insurance agent to see what coverage is best for you.
Workers' compensation insurance: This pays for medical care and lost wages when an employee is injured on the job. It's required if your company has more than three to five employees, depending on the state you do business in.
Property insurance: If your business includes a building and/or equipment, this policy protects against theft, fire, vandalism, and other damages. It may include business interruption insurance, which covers your earnings if your business temporarily can't operate.
Life insurance: Do you have loved ones who rely on your business income? This policy pays your beneficiaries upon your death, giving you peace of mind that they'll be taken care of.
Terrorism insurance: Other policies may or may not provide terrorism coverage. Some situations require an additional policy to obtain the appropriate amount of coverage needed.
Business owner's policy (BOP) is a packaged policy that covers many of the previously listed items. This coverage is tailored to fit the insurance needs of your business. Often, business owners can save money by bundling their services in this package. Contact your insurance agent to develop the best BOP for your company.