Essential Insurance Policies Every Small Business Owner Should ConsiderWant to beat the odds as a small business owner? While many small businesses fail, a good insurance strategy may shield you from financial catastrophe. Make sure you’re protected by taking out the most essential insurance policies for small businesses.
Commercial General Liability Insurance
Commercial general liability insurance is a staple of business insurance – and for good reason. It provides coverage for third-party bodily injury and property damage claims. Whether you’re a shop owner who’s worried about a customer falling on your premises or a contractor worried about accidentally damaging a client’s property while performing work, this is an essential insurance policy to own.
Commercial general liability insurance also provides coverage for third-party personal and advertising claims. For example, if you run an advertisement for your business and someone claims that an image in it infringes on their copyright or that the wording amounts to defamation against your competitors, your general liability insurance policy could cover you. Other important coverage includes false arrest and wrongful eviction.
Commercial Property Insurance
If you have a physical location, you’ll benefit from commercial property insurance, no matter whether you own or lease. In fact, your mortgage or lease agreement may require you to maintain this coverage.
Commercial property insurance covers the building as well as the business assets inside, such as your inventory, equipment, furniture, and supplies. A standard commercial property insurance policy covers many common loss events, including fire, wind, hail, and vandalism. However, policies typically exclude some perils, including floods, earthquakes, and mud flows, meaning you may want to consider purchasing additional coverage. Policies also exclude damage from wear and tear.
Business Interruption Insurance
Many small businesses have limited cash reserves and therefore depend on steady cash flow. If a natural disaster forces you to shut your doors for days, weeks, or even months, you might be unable to recover. Business interruption insurance helps by making up for lost income during a covered event. Business interruption insurance is typically tied to commercial property insurance and usually provides coverage for the same perils.
Commercial Auto Insurance
If your business owns any vehicles, you need commercial auto insurance.
When commercial vehicles are involved in crashes, costly lawsuits and massive jury awards are common – and small businesses are not immune to this risk. For example, Daily Local News says a bicyclist was awarded $29 million after a plumbing company truck collided with him and caused him severe injuries.
To shield yourself from this risk, consider whether your liability limits are high enough. You can increase your limits on all underlying liability policies – including commercial auto insurance – by buying umbrella liability insurance.
Also consider whether you need hired and non-owned auto insurance. If you have employees who use their personal vehicles for business purposes, hired and non-owned auto insurance will provide liability protection for your business in the case you are named in a lawsuit. The car owner still needs to maintain personal auto insurance, but this coverage does not protect your business.
Workers’ Compensation Insurance
State law requires most employers to maintain workers’ compensation insurance. If you have employees, this is likely non-negotiable. Workers’ compensation provides vital protection for employees who experience work-related injuries or illnesses and protects employers from lawsuits over work-related injuries and illnesses.
Other Insurance Products to Consider
Depending on the nature of your business, you may need additional insurance policies. Some common policy types to consider include:
- Cyber insurance – Provides coverage for cyberattacks and data breaches. Hackers target businesses of all sizes. A cyber event may be particularly devastating for small businesses.
- Professional liability insurance – Also called errors and omissions insurance, this covers lawsuits alleging financial loss stemming from errors, omissions, or negligence in your professional services.
- Employment practices liability insurance – Provides coverage for lawsuits alleging wrongful employment decisions, discrimination, and harassment. If you have employees, employment practices liability insurance will provide you with valuable coverage.
- Employee benefits – Helps small businesses achieve their recruitment and retention goals while promoting employee engagement and wellbeing.
Is your small business protected? Heffernan Insurance Brokers provides tailor-made insurance packages for small businesses. We’ll work with you to review your coverage needs and create an insurance package that protects your assets. We can also help you explore cost-saving strategies, such as using a business owner’s policy to bundle coverages. Learn more.
