5 Types of Business Insurance Every Small Business Needs
Starting a business requires a lot of paperwork and admin. You need to get your business registered, set up bank accounts, form a retirement plan, and figure out how you will process your taxes. One of the important steps often gets left out: business insurance.
Everything in our personal lives needs insurance to cover potential catastrophes, and businesses are no different. A myriad of things can go wrong at any time, and when you are dealing with clients and big sums of money, one accident can lead to huge issues. For this reason, insurance for your business is absolutely crucial. Furthermore, you will need more than one policy.
As with personal insurance, you need to insure the different aspects of your business. Here are the 5 types of business insurance your small business cannot do without.
General Liability Insurance (GLI)
We’ll start with the insurance that deals with everyone but you. Liability insurance is crucial for individuals, especially when they are driving or doing anything else that could seriously harm another person or their property. Since your business is dealing with many other people every single day, and any accidents could cause major financial or even health problems, you could find yourself facing huge claims you cannot pay.
General liability insurance covers your business for claims that it caused bodily injury to a third party, property damage to a third party, and personal injuries such as libel or slander. That last is becoming more important by the day. We now live in a world in which businesses need to post to social media and blogs to stay relevant. Accidentally libeling someone is all too easy.
Commercial Property Insurance
In 2022, your business may not have a physical headquarters, and as such commercial property insurance is not necessarily as relevant as it once was. Commercial property insurance will pay claims for damage to your owned or rented building and business equipment.
If you don’t have offices but work from home, speak to a consultant about whether commercial property insurance for your home office makes sense. Considering you already pay homeowners insurance, you probably won’t need it except for the equipment you make use of.
Business Income Insurance
Business income insurance helps when you cannot conduct business because of property damage. Without insurance, you will struggle to pay your own salary, as well as the salaries of any employees. You will also struggle to pay rent, utilities, and other business expenses. Business income insurance can be the difference between having to close your business and managing to hang on for a couple of months.
Professional Liability Insurance
Yes, we’ve already covered liability insurance, but that was for general liability. Professional liability insurance covers lawsuits brought against you for mistakes you made when providing professional services. This is more of a risk for people in some professions than in others. For example, if you are providing physical or mental health services, mistakes can have massive consequences. Professional liability insurance may not save your reputation, but it will save you from having to find millions of dollars to pay a claim.
Workers’ Compensation Insurance
What happens if your employees get hurt doing the job? Not only will you have to compensate them for wages lost, but you also need to pay for their medical bills and other related expenses. These are not covered by liability insurance. In most states, you are required by law to have workers’ compensation insurance.
Data Breach Insurance
In today’s world, data breach insurance is necessary for almost every business, even those that don’t primarily exist online. The fact is that data breaches can compromise not only you but your clients as well. You need to spend money fixing any problems caused by the data breach, as well as helping any clients who were affected with things like identity theft monitoring services.
Commercial Auto Insurance
Do you own a company car or employ drivers for business purposes? You will need commercial auto insurance for your vehicle rather than personal insurance. If you use your own vehicle for drivers to carry out work-related tasks, you may need to switch to commercial auto insurance.
With the above 7 types of insurance, your business should be covered for all eventualities. Don’t risk going without business insurance, as your business may never recover from a claim.
This article has been published in accordance with Socialnomics’ disclosure policy.