Unexpected incidents are inevitable when running a business. While there are millions of small businesses that operate today, not all of them have the necessary bundle insurance. As a result, they risk facing fines, losing money, and permanently shutting down due to lawsuits.
Although buying insurance can be costly, commercial business insurance can help business owners minimize risks. Purchasing insurance for your small business is equivalent to buying protection. For instance, small businesses are more vulnerable to data breaches. Hence, cyber protection insurance would be wise. This insurance can help secure your business data and provide coverage for some losses due to a data breach.
But besides cyber insurance, other commercial insurance policies provide various coverages for businesses with different needs. Each insurance offers unique benefits, and you’ll likely need to combine them.
That said, read the primary types of business insurance mentioned below that you can buy to protect your small business.
- General Liability Insurance
General liability insurance protects small businesses against third-party claims for physical damages. The primary benefit of business liability insurance is that it protects your small business from claims involving your product, service, or property. For example, if a customer had an accident and acquired physical injury on the company’s premises, the insurance will cover the medical bills.
Accordingly, general liability insurance will cover your legal defense costs if someone sues your business for advertising injury or bodily harm. In addition, this insurance provides third-party property damage coverage. Hence, it covers the replacement cost for any damaged property owned by the customer through an accident.
Besides third-party bodily injuries and property damage, this insurance also covers product liability and personal and advertising injuries. All the coverage of general liability insurance can help protect your small business from financial losses due to lawsuits settled in favor of the injured party.
- Workers’ Compensation Insurance
Workers’ compensation insurance is a type of commercial insurance that protects business owners from liability if staff members are injured on the job. Notably, it also benefits staff as this insurance pays for medical expenses resulting from work-related injuries and illnesses. Consequently, workers’ compensation insurance helps reduce the likelihood of business owners facing a lawsuit for workplace injuries and illnesses.
In addition to covering medical expenses and lawsuits, workers’ compensation insurance includes a portion of a staff’s lost wages while recovering from a work-related injury or illness. And, in case of a fatal incident, the insurance covers death benefits to support the deceased’s family members and pay for funeral expenses.
Furthermore, regardless of the business type and number of staff, there’s a law in most states that requires businesses to have workers’ compensation insurance. As a small business owner, you may probably have thought of skipping this insurance due to the assumption that accidents in your workplace are unlikely. However, doing so may result in financial losses due to legal fines and penalties.
- Professional Liability Insurance
Professional liability is commercial insurance intended for businesses that provide professional services or advice to customers. If a mistake in providing professional service to clients or customers causes financial harm, they can sue the service provider. But note that even if a service provider didn’t commit a mistake, a client could still sue the business due to dissatisfaction.
Professional liability insurance is essential if your small business provides professional services. It offers lawsuit coverage in case your services cause financial harm or fail to meet industry standards. Notably, it can cover legal fees if a client sues you for negatively impacting their bottom line due to undelivered services. Professional liability insurance also protects if a client sues your service due to missed deadlines and it causes disastrous consequences.
With that in mind, although it isn’t a legal requirement for businesses, it’d be best to have professional liability insurance, particularly if you’re running a high-risk small business.
- Business Interruption Insurance
Business interruption insurance covers lost income if a business closes due to floods, fires, and other natural disasters. Suppose unexpected events like fire or flood force your small business to close. This insurance helps you cover your ongoing expenses, lost revenue, and other costs associated with moving your small business to a different place.
If an event causes damage to your business, this type of insurance will provide coverage for your workplace, whether it’s an office or a home office. But besides lost revenue and relocation expenses, business interruption insurance coverage may also include ongoing operating costs like rent and electricity. It may also cover loan payments, taxes, and staff wages.
Overall, insurance for your small business is a critical consideration. Besides protecting your business from various liabilities and risks, having business insurance helps ensure compliance with local and state regulations. While there are multiple insurance policies, you can consider the primary business insurance mentioned above to reduce business risks.