If you own a small business, there’s no denying one the most important things you need to protect your assets is Small Business Insurance. But What insurance do you need for a small business?
There’s no ‘one-size-fits-all’ when it comes to insuring a business, just as there are no two businesses that are exactly the same. Your insurance needs will vary depending on a variety of factors, such as, the industry you operate in, your trade, and the type of business you run. It will also be influenced by the size and location of your business and your appetite for risk. A tradie will face different challenges and risks, to say, a real estate agent, coffee shop, or an engineering firm. Just as a mobile or home-based hairdresser will have varying needs to those of a salon owner who has a shop front.
However, one thing’s for certain, and that is, finding the right insurance is an essential part of managing the risks involved in operating your business. And let’s face it – all businesses confront an element of risk on a daily basis, regardless of their size or the industry they are in.
It’s also important to note that some types of insurance are compulsory for many kinds of businesses, whether it’s a legislative requirement, an obligation as a member of a professional board or association or required by a contract you enter into with a landlord or a customer.
Fortunately, these days there are a variety of policy options to choose from and business insurance policies can be tailored to suit your individual business needs.
What insurance do you need for a small business?
The following are the types of insurance you need for a small business.
1. General Liability Insurance: Every business, even if home-based, needs to have liability insurance. The policy provides both defense and damages if you, your employees or your products or services cause or are alleged to have caused Bodily Injury or Property Damage to a third party.
2. Property Insurance: If you own your building or have business personal property, including office equipment, computers, inventory or tools you should consider purchasing a policy that will protect you if you have a fire, vandalism, theft, smoke damage etc. You may also want to consider business interruption/loss of earning insurance as part of the policy to protect your earnings if the business is unable to operate.
3. Business owner’s policy (BOP): A business owner policy packages all required coverage a business owner would need. Often, BOP’s will include business interruption insurance, property insurance, vehicle coverage, liability insurance, and crime insurance . Based on your company’s specific needs, you can alter what is included in a BOP. Typically, a business owner will save money by choosing a BOP because the bundle of services often costs less than the total cost of all the individual coverage’s.
4. Commercial Auto Insurance: Commercial auto insurance protects a company’s vehicles. You can protect vehicles that carry employees, products or equipment. With commercial auto insurance you can insure your work cars, SUVs, vans and trucks from damage and collisions. If you do not have company vehicles, but employees drive their own cars on company business you should have non-owned auto liability to protect the company in case the employee does not have insurance or has inadequate coverage. Many times the non-owned can be added to the BOP policy.
5. Worker’s Compensation: Worker’s compensation provides insurance to employees who are injured on the job. This type of insurance provides wage replacement and medical benefits to those who are injured while working. In exchange for these benefits, the employee gives up his rights to sue his employer for the incident. As a business owner, it is very important to have worker’s compensation insurance because it protects yourself and your company from legal complications. State laws will vary, but all require you to have workers compensation if you have W2 employees. Penalties for non-compliance can be very stiff.
6. Professional Liability Insurance: this type of insurance is also known as Errors and Omissions Insurance. The policy provides defense and damages for failure to or improperly rendering professional services. Your general liability policy does not provide this protection, so it is important to understand the difference. Professional liability insurance is applicable for any professional firm including lawyers, accountants, consultants, notaries, real estate agents, insurance agents, hair salons and technology providers to name a few..
7. Directors and Officers Insurance: this type of insurance protects the directors and officers of a company against their actions that affect the profitability or operations of the company. If a director or officer of your company, as a direct result of their actions on the job, finds him or herself in a legal situation, this type of insurance can cover costs or damages lost as a result of a lawsuit.
8. Data Breach: If the business stores sensitive or non-public information about employees or clients on their computers, servers or in paper files they are responsible for protecting that information. If a breach occurs either electronically or from a paper file a Data Breach policy will provide protection against the loss.
9. Homeowner’s Insurance: Homeowner’s insurance is one of the most important kinds of insurance you need. This type of insurance can protect against damage to the home and against damage to items inside the home. Additionally, this type of insurance may protect you from accidents that happen at home or may have occurred due to actions of your own.
10. Renter’s Insurance: Renter’s insurance is a sub-set of homeowner’s insurance which applies only to those whose who rent their home. The coverage is protects against damage to the physical property, contents of the property, and personal injury within the home.
As with any purchase you make, doing your homework and shopping around is the best way to ensure you get the right cover for your business – and at the right price. The best way to do this is to use a comparison site where you can compare products closely and choose one that meets all of your small business needs. At the end of the day, having the right protection could mean the difference between continued success, and being left high and dry should you need to make a claim.