Small Business Insurance Needs

Operating a small business can involve certain liabilities, and getting the appropriate insurance coverage can be a critical element in effectively running your business. In addition to covering any liabilities associated with your business, some states require businesses to have specific insurance policies. It is the business owner's responsibility to ensure they have the appropriate policy. Small businesses operating without the right coverage may be left vulnerable and responsible for covering claims not met by their insurance policies. Many companies do not have the ability to cover these sorts of costs and may be forced to go out of business; this is why it is essential to make sure you have the right types of insurance policies.

So, what type of insurance do you need to protect your small business? It depends on the type of business you operate and what state(s) your business operates in. Here we will discuss the most common types of insurance a small business may need in order to protect itself and operate in accordance with the law.

Properly insuring your business against certain liabilities is an essential part of responsibly operating a business. Therefore, ensuring that you have the right type of insurance is a critical factor in protecting your business. These are some of the most common types of insurance that a small business may need.

• General Liability Insurance

  General Liability Insurance can help protect you, your employees, and your business from claims associated with bodily injury or property damage to another party. For instance, if a customer parks outside of your building and an employee of yours operating a forklift drops a pallet on their car, this could be covered by general liability insurance. Another example could be if a customer falls down a set of steps at your business that are deemed hazardous; this could also be covered. In addition, some general liability insurance policies include product liability insurance, which can cover you from claims in which your product is said to have caused bodily injury or property damage.

• Commercial Property Insurance

  Commercial Property Insurance helps to protect your owned or rented building and all equipment and materials within the property. So this type of insurance protects against things such as fire damage, weather damage, burglary, and vandalism. For example, if someone breaks a window and steals your products or equipment inside of your building, commercial property insurance can cover the stolen goods and the broken window, as well as any other damages to the building.

• Business Income Insurance

  Business Income Insurance can help cover the loss of business income in the case that you cannot conduct business for a period of time. For instance, if the city has to repair an infrastructure issue on the block your business is located, and all foot and automobile traffic is denied access, and you are forced to close your business for a time, business income insurance can replace the net profit you would have normally made during that time period.

• Professional Liability Insurance

  Professional Liability Insurance insures against claims regarding mistakes, oversights, or inaccuracies made in the professional services of your business. An example could be that your advertising firm is in charge of creating and running online ads for a client. Suppose your company produces and runs an online ad campaign that inadvertently misrepresents (false advertising) your client's products, resulting in legal trouble for them. In that case, they could turn around and try to hold your business accountable through a lawsuit. In an instance like this one, professional liability insurance could help cover your legal costs.

• Workers' Compensation Insurance

  Workers' compensation insurance can cover employees' medical treatments who are injured on the job. In addition to this, it can also replace workers' lost wages due to their inability to work because of their injury. Most states require that businesses carry workers' compensation insurance if employees work for their company.

• Data Breach Insurance

  In the event of a data breach, your business' private and sensitive information regarding the business, its employees, and customers can be at risk. This data can include the company's proprietary intellectual property and customer's credit card information. A data breach is a huge risk for both big and small businesses, and data breach insurance can help protect you and your business against some of the risks associated with a data breach.

• Commercial Umbrella Insurance

  Commercial umbrella insurance extends the limits of the coverage granted to you by your other insurance policies. So, if the amount of one of your other policies has reached the limit that it is allowed to payout, a commercial umbrella policy could provide you additional liability coverage. This additional coverage could increase the amount that you could receive beyond what your regular policy dictates in the case of a more significant claim. You could think of it as somewhat of a large reserve tank in your vehicle in the case that you may exhaust your fuel resources. This makes it a great type of insurance to have in order to make sure that in the case of a large claim, you will have enough coverage to help your business get through and survive the issue at hand.

Disclaimer: Incorp.com is not a law or accounting firm, and Incorp.com should not be relied upon to provide legal or tax advice. If legal or other accounting assistance is needed, we recommend that you seek the services of a competent professional. The content on Incorp.com should not serve as a substitute for legal advice from an attorney or accountant familiar with the facts and circumstances of your specific situation. Contact your tax adviser or legal counsel before making any decisions.