Good news! You’re starting a business. If you don’t have the right insurance, it could be shut down before you even open your doors to customers. As with most things in life, there are many types of insurance for your business. It’s important for businesses to fully understand what they need and why they need them. Here is a list of nine essential types of coverage that every small business needs:
# 01. Worker’s Compensation Insurance
Worker’s compensation of policy is a requirement by the law. If you employ people, then it’s crucial that protection is in place in case an injury occurs while at work. This type of insurance also covers medical costs and provides wage replacement benefits for employees who experience accidents while performing their job duties. It also protects employers from lawsuits associated with workplace injuries by providing legal defense.
# 02. Business Owner Policy
This type of policy insurance product is available for small business owners. Its coverage protects for all major property and liability risks. One key reason why small businesses should have a business owner policy is that it can help protect the company’s assets in case of an unforeseen event, such as a fire or theft. Businesses can always Opt-in for additional cover.
# 03. Commercial Auto Insurance
If you use a vehicle for business purposes, then you will need commercial auto insurance. This type of policy covers vehicles that are used for work-related activities. You require coverage since your personal auto insurance policy might not provide the same level of protection.
Some businesses also choose to add rental car reimbursement onto their commercial auto insurance policy. This comes in handy if the company’s vehicle needs repairs, and you need to rent a car while it is under repair.
# 04. Product Liability Insurance
You need product liability insurance if your business manufactures, distributes, or sells products. It protects you from potential lawsuits in the event that one of those products causes harm to someone. Even if you don’t think your company poses a risk, it’s better to be safe than sorry.
This types of insurance protect businesses from lawsuits that can range from minor injuries to death. It’s important to have coverage in place so that you don’t have to pay for damages out of your own pocket.
#05. Professional Liability Insurance
This types of insurance are also known as Errors and Omissions (E&O) insurance. They provide protection for professionals such as doctors, lawyers, accountants, and architects. Clients would normally sue for negligence or mistakes made while performing their services. Since these types of lawsuits can be quite costly, it’s important for professionals to have E&O insurance. Otherwise, prepare to foot the bill from your pocket.
#06. Umbrella Insurance
An umbrella policy kicks in to cover liability claims after your basic underlying insurance has been exhausted. Or, there’s not enough coverage on an existing policy. It is great protection against lawsuits and other unexpected financial burdens resulting from injuries to employees, customers, and vendors. Most of the claims end being determined by the courts, whose determination is difficult to predict. Better safe than sorry!
#07. Directors and Officers Liability Insurance
Directors and officers liability policy protect the people who run your company (directors and officers) from personal financial damages. This would arise when they are sued for wrongful decisions or actions while in their corporate roles. One would ask this cover? Senior managers make difficult decisions for the benefit of the company. Some decisions may go bad, inviting legal consequences. This types of insurance give management confidence to run the company.
Example of a suit
High-ranking corporate positions can be sued for things like wrongful termination, libel, or slander. D&O insurance helps to protect these individuals from having to pay out of their own pockets if they are found liable.
#08. Commercial Property Insurance
If you own a business, then you need commercial property insurance to protect your building and its contents from damage or theft. This type of policy covers everything from the structure of your building to the furniture, equipment, and inventory inside it.
It’s important to have this coverage in case there is a fire, storm, or other events that damage your property. Without commercial property insurance, you would either have to pay out of your own pocket or you might not be able to afford repairs and would need to close the business. Lenders may also have interest in the property if they financed acquisition.
#09. Commercial Crime Coverage
Crimes such as employee theft, robbery, forgery, computer fraud, and others can have a devastating effect on businesses, so it’s critical to have insurance in place that can help you recover some of those losses. Employee-related fraud remains a significant concern for many companies.
You don’t want to lose money because of a crime.
In conclusion, insurance matters!
It protects what you’ve worked hard to build from damage or lawsuits, which could put all of that at risk if they go unpaid or unpunished by law enforcement agencies. Be smart – protect everything that matters with insurance policies created specifically for businesses like yours. The next thing you need to know is business education on matters of Insurance. Lastly, you will need an insurance agent to walk you through what we have briefly discussed. There are also many other types of insurance that you also need to know about.
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