Small Business Insurance 101
If you own a small business, getting the right insurance can be essential. The process, however, doesn’t have to be complicated or expensive. By choosing the right types of business insurance, you can keep costs under control while getting the protection you and your business need.
Read on to learn about the importance of business insurance and which policies may be most important for your unique needs.
What Does Business Insurance Cover?
There are many types of business insurance, so it’s best to work with an insurance carrier that offers flexible options to add and delete coverage as your business changes. Depending on the type of business you own and how you operate, your insurance needs could be minimal. What’s most important is having your biggest risks covered by a quality insurance policy.
Below are three of the most common areas of coverage from business insurance.
What business insurance may cover
- Liability insurance protects you from claims related to injuries and losses potentially due to someone else. If a business visitor trips on a stair or slips on ice, liability insurance may cover the cost of injury. Liability insurance may also protect you from legal fees that come up from a dispute related to your business and any services or products provided.
- Property insurance covers the locations and items your business owns. Property insurance may protect you from fires, burglaries, vandalism and other unintentional damage to your business’s possessions.
- Business interruption insurance can help your business if it has to suddenly shut down or change operations due to a direct, physical loss of or damage to property. For example, if your business has to close temporarily because of a disaster, business interruption insurance may cover some or all of the income you would have regularly earned had your business remained open.
Types of Business Insurance
According to the United States Small Business Administration, these are among the most important types of business insurance to know about:
- General liability insurance is important for virtually every small business. General liability protects you from claims related to injuries, libel, defending lawsuits and legal judgments.
- Product liability insurance can be helpful if you sell or distribute a physical or digital product. This insurance protects you from claims related to injuries or losses from your products, such as a defective product that injures an end customer.
- Professional liability insurance is important for many service businesses. Professional liability coverage protects you against financial losses related to the services you provide, including malpractice, errors, and negligence.
- Commercial property insurance can prove valuable if your business operates in physical locations outside of your home. It covers you against losses and damages to the property for a wide range of covered reasons. As with all insurance, also take the time to check your policy to find out what’s not covered. You may want to add a supplement for floods or earthquakes, for example.
- Home-based business insurance is advantageous if you’re one of the growing number of business owners who work from home. This coverage typically offers limited property and liability protection for businesses that operate from the owner’s home. If you have expensive business equipment at home, store sensitive customer information or data at home, or see customers in your home office, among other scenarios, this type of coverage could make sense.
- Business owners’ policy may combine liability and property benefits into one policy with the most common protections for small business owners. It can lead to discounts in some situations.
- Commercial umbrella insurance is added coverage on top of your other insurance policies if you exceed policy limits. Commercial umbrella insurance often includes additional liability coverage and may extend to vehicles used by employees.
Insurance for business owners
When you start your business, the odds are that no one will show up and tell you which insurance products you need most. It’s up to you to take action and work with an insurance professional to choose the right coverage for your needs.
