What types of insurance does your small business need to protect itself? It depends on your business. But let’s get one thing clear: there’s many different types of business insurance, so do your research. Here are the most essential ones you should consider to get you started.
Did you know about 40 percent of U.S. small businesses don’t have any insurance at all?
As a business owner, it’s easy to forgo purchasing insurance. Perhaps you operate in a low-crime area, so chances of a burglary are slim. Or you have hired the meanest looking security guards, burglars stand no chance.
Well, running a business is akin to hiking in the Amazon. You face multiple risks and hazards every day. Without insurance, any risk or hazard can leave you counting severe losses.
In this article, we’re telling you the different types of business insurance you absolutely must have.
1. Property Insurance
A fire can raze down your workspace. A storm can sweep away the building that houses your business. An earthquake can topple it. Or, the property could collapse due to structural failures.
Whatever kind of disaster that befalls your workspaces, the property as well as inventory, furniture and equipment face destruction. Consequently, your business will incur huge financial losses.
Unless you have very deep pockets, you might fail to recover from these losses. Repairing the premises and replacing the stock and office equipment and furniture costs lots of money. It’s almost like starting a new business.
This is why purchasing property insurance is necessary. The policy will compensate your business for any property losses.
Note most property insurance policies don’t cover damage caused by natural disasters. Talk to your agent to ensure your policy includes natural events, especially if your business is located in vulnerable areas.
2. Cybersecurity Insurance
If you follow tech news, you could conclude cybercriminals only target the big boys, like Sony and Expedia.
Oh, how wrong! 43 percent of cyber attacks target small businesses. If that number doesn’t get you scared, then this will. 60 percent of small businesses close shop within 6 months of a cyber attack!
If you have a business website or a social media page, purchasing cybersecurity insurance is a must. If the cyber hackers manage to get in, your goose, which has long been on the frying pan, will be cooked in more ways than one. The hackers can disable your website or social pages, which means no ecommerce sales. They could steal and leak customer information, which will leave you facing a data breach suit.
But if you have cybersecurity insurance, you goose might live to see another day. The policy protects your business from all types of internet-based risks.
3. Business Interruption Insurance
The types of insurance policies discussed above will typically compensate your business for loss of physical or tangible items. They, however, won’t compensate you for interruption of your daily business activities.
For example, a property insurer will give you money to rebuild the property and replace lost inventory. It won’t, however, compensate you for any loss of sales you might have incurred during the business shut down.
This is where business interruption insurance comes in handy. The policy will pay up for lost income resulting from such unforeseen and catastrophic events.
4. Workers Compensation Insurance
This is probably the most popular insurance policy among businesses, largely because it’s a legal requirement in most states.
Even then, employee injuries are notoriously common. In 2016 alone, private sector employers reported 2.9 million non-fatal injuries. Common causes of these injuries include trips, slips, falls, overexertion, distractions and poor housekeeping.
That, though, doesn’t stop businesses owners from purchasing the absolute minimum workers’ compensation insurance. If you choose this route, you’re taking a huge risk.
Get this. Every week, American employers pay out about $1 billion in direct compensation to employees. It’s not unthinkable that a couple of serious employee injuries can quickly max out your coverage, and still leave you with a huge bill to clear.
The vital point here isn’t purchasing workers’ comp. It’s purchasing adequate coverage. Get a business risk analyst to audit your company and recommend the right amount of coverage to buy.
5. Professional Liability Insurance
If your company is in the business of selling professional services, you need professional liability insurance.
If you’re a tax consultant, for instance, you could render advice that leads a client to claim illegal tax benefits –perhaps some tax rules changed when you weren’t looking! When the IRS comes for his ass, he will come for yours too — in the form of a negligence lawsuit.
But because you’re a clever consultant who never lacks adequate professional liability insurance, you won’t have to fear for your butt. The policy takes care of such claims.
The type of professional liability insurance you need depends on the nature of your business. Medical practices, for instance, need medical malpractice insurance. Manufacturers need product liability insurance.
6. Home-Based Business Insurance
There are 38 million home-based businesses in the country.
Starting a home business is cost-effective. No worries about running late with rent. However, when it comes to insuring it, most owners run into confusion. Does your home insurance also cover your business? If thugs break in and make way with your inventory, will the insurer pay up?
Unfortunately, home insurance doesn’t typically cover any commercial activities within the property.
The good news? Insurers offer home business insurance policies, which specifically protect your business in the way other commercial policies do. Alternatively, you can ask your home insurer to adjust your policy accordingly.
This website also enables you to shop for and customize your preferred insurance policy.
You Need These Different Types of Business Insurance
As an entrepreneur, each day presents an opportunity to make money and grow your business. But it also presents various risks, from burglaries to cyber attacks. With these different types of business insurance, though, you’re protected from any eventualities.
Reach out to your insurance agent for further details, and keep tabs on our blog for more business tips.