Just as important as starting your business is protecting your business. Many strong small businesses struggle to survive was the reason had nothing to do with the product or service offered. Not being protected by a commercial insurance policy unique to your enterprise is a critical mistake any business can ill afford to make. There are a lot of different products offered and not all of them will make sense for your company.
However, regardless of how you earn your living, several products can help ensure you don’t join the ranks of the under-insured business owner. We will look at the three most common insurance products which are property, liability, and workers compensation. In addition to those, there are other valuable policies to fill in the gaps left by the big three.
Business Property Insurance
Property insurance is fairly straightforward in that it covers damages to your business property or its contents. There are many subsets of property damage relating to the cause such as fire, theft, vandalism, smoke, or water. It is important to know what your policy does and does not cover when selecting a policy that is right for your business. An important rider coverage that may interest you is Business Interruption or Loss of Earning Insurance. This product will reimburse you for taxes, salaries, rents, and lost earnings when damages to your property make operating your business impossible.
For those who utilize a home office for their small business, don’t make the mistake of assuming your homeowner’s insurance will cover losses related to your business. Just like there are exceptions to your homeowner’s insurance policy such as damage by flood or hurricane, there may be exceptions related to property owned by the business and not by you as the individual. When in doubt, always ask your trusted insurance professional. This will save you from that horrible feeling of finding out afterward that you aren’t covered.
Liability Protections
Just as important as property insurance for your business is liability insurance. Similar to the liability portion of your personal automobile insurance, business liability insurance provides defense and damages if you, your employees, or your products or services cause harm to a third party. Commonly, liability insurance will cover you if a customer were to sustain an injury while on your premises. It also covers the cost of defending and resolving a lawsuit against you though you may find it necessary to bring in additional legal representation for more serious claims.
If your business also requires the use of company-owned automobiles, you will also need commercial automobile insurance to reimburse you in the event of theft or damages to your fleet or if one of your drivers causes injury or damages to a third party. An important rider under liability insurance is Errors and Omissions Insurance (E&O insurance). This product provides defense and damages due to failure or improperly rendering professional services such as legal, notary, accounting, consulting, insurance, real estate, and even beauty services. Of course, if you are in the medical field, Malpractice Insurance is of most importance. This product is not limited to doctors or dentists, real estate agents, architects, and other professions who may find malpractice insurance useful.
Workers Compensation Insurance
Most people have a basic understanding of workers’ compensation which provides insurance to employees who are injured on the job. It covers costs associated with the injury such as wage replacement and medical expenses when an accident occurs. Most businesses are required to carry some level of workers’ compensation insurance, exceptions may include those businesses that don’t have any W2 employees. Depending on your industry, more or less coverage may be right for you. An added benefit of workers’ compensation insurance is that it prevents an employee from bringing about negligent lawsuits against their employer. In exchange for the benefits provided by the policy, workers give up their right to sue the employer for the incident. Carrying the right amount of coverage is important to the financial health of your company and non-compliance penalties imposed by your state can be severe.
This is not a comprehensive list of all insurance policies available to business owners and it is advised that you speak with a trusted insurance agent to learn about additional products that may be right for your company. Not doing so or not carrying the appropriate coverage may be the difference between your company surviving after a damaging incident.
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