Any business needs insurance to protect against various risks during normal business operations. However, there are various types of insurances for businesses. So choosing the right may become overwhelming.
Let’s help you choose the types of insurance for small business.
📃 General Liability Insurance
Also known as commercial general liability insurance, General Liability Insurance (GLI) covers medical expenses or attorney fees involving bodily harm and property damage for which your business is legally responsible.
You can get this as a stand-alone policy or combine it with other policies, such as Business Owners Policy. GLI covers claims resulting from normal business operations. Without this coverage, you’ll fork the costs from your pocket. Any business owner wouldn’t like to waste resources like that.
Some of the claims that GLI covers include the following:
📃 Third-Party Bodily Injuries
Any customer who gets hurt because of slipping or falling inside your premises can sue your business. GLI includes bodily injury liability coverage to help pay for the medical bills of anyone injured.
📃 Third-party Property Damage
If your employees are at a customer’s site and cause any damage to their property, your business is responsible for covering all damages caused. A property damage liability cover funds all the repairs or replacement costs to restore the customer’s property.
📃 Reputational Harm
Someone can sue your company for liberal or slander. This may result from something any member of your team said about that person. If you have GLI, you will rest back as your insurance company defends your business.
📃 Advertising Injury
Using other people’s copyrighted works without their permission may make your business get sued for copyright infringement. You may never know when this will happen. So, you must have cover for it just in case. Fortunately, GLI will come in handy to protect your brand in such a situation.
General Liability Insurance is subdivided into:
- Commercial umbrella insurance to cover expensive claims
- Employment practice liability insurance for legal defense costs from former employee lawsuits.
- Commercial auto insurance
- Management Liability
📃 Commercial Property Insurance
This cover protects your business’s physical assets from explosions, fire, storms, vandalism, and burst pipes. Commercial property insurance doesn’t cover problems resulting from natural disasters such as earthquakes and floods.
💰 How Much Does Commercial Property Insurance Cost?
The amount you’re likely to pay for commercial property insurance depends on the value of your business assets.
Other factors considered include:
- Location of your business and the likelihood of disasters
- Nature of your business design
- Purpose for the property
- Fire and theft protection measures in place
Commercial property insurance covers everything inside and outside your property, including computers, furniture, equipment, inventory, exterior signage, and essential documents.
📃 Business Income Insurance
Also known as business interruption insurance, it covers loss of income when you can’t operate because of a covered peril such as wind, fire, or theft. The policy covers your business when it has to stop operations suddenly. It offers additional coverage to commercial property insurance.
You can opt for extended business cover to prevent a slowdown when it reopens. It keeps your business afloat when sales are slow, and you complete a full restoration. The amount payable as part of this insurance cover depends on income and expense records. So, ensure to keep them in a safe location.
Business income insurance doesn’t cover losses from closures resulting from damages not covered in the policy. The insurance company does not reimburse the income you should have documented. You can have business income insurance to cover utilities. Any business that has physical properties and equipment needs this type of insurance.
📃 Commercial Auto Insurance
Commercial auto insurance covers cars owned and used by your business. The policy covers your business from liabilities resulting from accidents caused by your business vehicles. The coverage compensates occupants involved in the accidents.
Commercial auto insurance offers valuable financial protection to your business and employees who drive company vehicles or those hired by your company. Remember that personal auto insurance doesn’t cover company vehicles.
What Does Commercial Auto Insurance Cover?
The policy covers comprehensive physical damage and liability damage to your business vehicles. It also offers financial protection to cover the medical bills of everyone involved in the accident.
Commercial auto insurance also covers damages on vehicles resulting from the negligence of a motorist without insurance or underinsured. The policy covers all cars your business owns, leases, uses, or hires. This insurance also covers physical damage from collision loss or comprehension loss.
The most common options for commercial auto insurance include the following:
- Rental reimbursement
- Underinsured or uninsured motorist coverage
- Personal injury protection
- Medical payments cover
📃 Workers’ Compensation Insurance
This insurance covers workers’ medical costs and loss of income resulting from work-related injuries or illnesses. The policy is mandatory for all businesses across all states. So, small business owners need this policy immediately after hiring their first employee. This is very important since you may never know when an employee may slip or fall in the line of duty.
Workers’ compensation insurance comes in handy for employees who need medical care or time away from work because of an injury that happened at the workplace. You are responsible for all medical and legal costs if you don’t have this policy. Your business may also be penalized with a jail term or fine for noncompliance.
This insurance doesn’t cover the following:
- Injuries resulting from intoxication, drugs, or business policy violations
- Claiming injuries after getting fired from the job
- Wages for a replacement worker
- Worker didn’t follow OSHA safety procedures
📃 Professional Liability Insurance
Professionals and businesses need protection from negligence claims from customers. The insurance coverage offers protection against claims of copyright infringement, negligence, or personal injury. It includes things you did or should have done.
How Does Professional Liability Insurance Work
Depending on your profession, the policy has different names. Medical workers call it malpractice insurance and real estate agents call it omissions insurance. The homeowners’ endorsements do not cover the specialty cover for in-home business policies.
Professional liability insurance policies depend on claims made. This means that it is suitable for claims made and the occurrence of events. A standard policy indemnifies the insured against loss when the policy is still valid to cover errors, omissions, and negligence against policy terms.
Who Needs Professional Liability Insurance?
Regardless of the size, businesses that need professional liability insurance may include:
- Property managers
- Management business consultants
- Occupational therapists
- Architects
- Accountants
- Photographers
- Personal trainers
- Information Technology specialists
💰 How Much Does Professional Liability Insurance Cost?
The premium you pay for this policy depends on your industry and the number of claims against you. Other factors determining the cost of professional liability insurance are the size of your team and the years you’ve been in business. Deductible and coverage limits also determine how much you pay for this coverage.
📃 Product Liability Insurance
This insurance covers legal expenses in a business resulting from claims that a product you sold or distributed caused injury or damage. Businesses in the supply chain are held responsible when a product harms or causes financial loss to someone, apart from some exceptions.
Product liability coverage offers financial assistance to pay legal fees, settlement, or judgment. This policy protects your business against claims regarding:
- Food contamination
- Design defects
- Allergic reactions
- Marketing defects
Product liability insurance includes tradespeople, manufacturers, retailers, food services, and cannabis businesses. This insurance doesn’t cover retail product costs, interruptions in business operations, employee injuries, or damaged or stolen goods.
📃 Employment Practices Liability Insurance
You need this insurance if a worker claims a violation of their rights. Although most lawsuits of this kind are against large corporations, you may never know when your business may become a victim.
Even small business owners may get into a situation like this, and only this policy will offer appropriate cover. Insurance companies now offer this policy to endorse their business owner policy.
Some of the claims covered by this policy include the following:
- Discrimination
- Wrongful termination
- Negligent evaluation
- Sexual harassment
- Infliction of emotional stress
- Wrongful discipline
The cost of this insurance policy depends on the type of business, number of employees, history of lawsuits, and risk involved. Your business will be reimbursed against the cost of defending the lawsuit in court, judgment, or settlement.
The insurance company will cover the legal costs regardless of whether you win or lose the case. However, the policy doesn’t pay for punitive damages, civil or criminal fines. This policy excludes liabilities covered by other policies.
📃 Crime Insurance
Businesses in sophisticated commercial environments today are at significant risk of various criminal activities. White-collar criminals have taken over traditional thefts. Common kinds of crime insurance claims include forgery, robbery, employee dishonesty, funds transfer fraud, and embezzlement.
Crime insurance protects your business from loss of money, inventory, securities, and other property resulting from fraudulent activities. The insurance covers the following:
- Direct loss of funds through embezzlement or fraudulent activities by employees
- Forging negotiable instruments like cheques
- Computer crime, such as during funds transfer
- Loss of money or securities on your premises or in transit
This corporate insurance policy is necessary for businesses prone to petty theft, including those transporting money, hiring short-term employees, managing inventory, or having expensive equipment. Digital crime is prevalent in businesses that handle sensitive financial records, customer data, and digital transactions.
The policy doesn’t cover situations including:
- Crimes by business executives
- Indirect losses in business
- Exposure covered by other policies
- Crimes committed by business partners
💰 How Much Does Crime Liability Insurance Cost?
Like other types of insurance for business, fidelity bonds, company policies regarding risks and coverage determine how much you’re likely to pay for a crime liability policy. Other important considerations include the number of employees, company security, property value, and financial controls in place.
📃 Cyber Liability Insurance
Businesses rely heavily on online transactions, although they have various cybercrime risks. The policy covers data breaches involving sensitive customer information such as account numbers, credit card numbers, social security numbers, and health records.
Cyber attacks and data breaches are expensive but becoming increasingly common in all businesses. Small businesses usually have weak cybersecurity protocols making them easy targets.
Apart from being an inconvenience, it may put you out of business. About 60% of small businesses shut down within six months because of cyber attacks. Cyber liability insurance helps your business recover financial losses from cyberattacks, including credit monitoring, fines, and attorney fees.
Businesses that can’t do without cyber liability insurance usually handle customers’ information, including:
- Drivers license number
- Personal information like emails, names, and addresses
- Medical information
- Credit card information
- Social security number
Cyber liability insurance comes in two options: first-party cover and third-party cover.
First-party cover protects against costs regarding cyberattack that impacts your business. It covers claims against ransom payments, business interruption expenses, and breach response costs.
Third-party policy covers the costs of lawsuits from clients who claim your company failed to prevent a cyber attack. Technology businesses need this policy to cover settlements, legal defense costs, and court-ordered judgments.
📃 Key Person Insurance
The success of a business is a joint effort of various employees. However, some are more valuable than others in keeping your business afloat. A key person policy covers your most valuable employee. The policy may include a rider for disability protection when the employee has a physical disability.
This policy safeguards small businesses from the death of a key employee or when he becomes disabled. A key person is an indispensable employee on your team because they have specialized skills or bring on the most sales.
💰 How Much Does Key Person Insurance Cost?
There’s no formula to determine how much you pay for key person insurance. You have to consider how much it would cost to hire someone like him. Consider how much income the person contributes to the company’s sales and current salary.
Options for insurance include permanent or term, depending on your business needs. A term policy reimburses your business if the key employee dies while the policy is still valid. The period for this policy is from 10 to 30 years.
A permanent policy also pays when the employee dies, including a cash value fund that benefits your business. Key person insurance gives your business a financial lifeline when an indispensable employee dies.
📃 Commercial Umbrella Insurance
You get an extra layer of protection with this policy. A commercial umbrella policy covers costs beyond the limits of other policies. It complements your other liability cover by taking over when the limit reaches.
Without this policy, you must pay out of pocket for costs that exceed your policy limits, including:
- Legal costs
- Judgment and settlement
- Medical bills
- Damage to people’s property
This insurance policy doesn’t cover all liability claims or extend the limits of some policies, such as commercial property insurance. Commercial umbrella insurance is helpful for businesses that:
- Allow customer walk-ins during open hours
- Frequently interacts with customers
- Works on other people’s property
🤝 Conclusion
Insurance is essential regardless of the size and type of your business. It offers financial relief if an event that was insured in the policy happens. After answering what business insurance do I need, streamlining operations using a tool like Field Complete is equally essential. The software has invoicing, reporting, scheduling, and dispatching features that make managing your business a breeze.
