As a business owner, it’s your responsibility to prepare for the unexpected. Properly ensuring your business is a huge part of that.
Small businesses and startups are economically vulnerable to business interruptions, whether it’s an unforeseen closure or a commercial liability claim. Proper insurance can help you cope with that. In a given decade, 40% of all SMB will file a property or liability claim – out of those that are insured at all.
However, there is a huge variety of business insurance packages out there. And many types of insurance sound unhelpfully similar. To help you get an overview, here are seven types of insurance your business needs.
Workers Compensation and Employer’s Liability Insurance
To start with, workers’ compensation insurance covers the medical bills if anything happens to your employees at work. For example, if they get injured while carrying out an assignment. Workers’ compensation insurance is mandatory in most U.S. states, starting with your first employee.
However, basic workers’ compensation insurance does not protect you if the employee additionally sues you – for negligence, for instance. Employer’s liability insurance covers any legal liabilities arising from this. This, too, is mandatory in some states, such as California, with a minimum cover of $100,000 per employee.
Often, workers’ compensation and employer’s liability insurance are combined in one policy.
Public Liability Insurance
Next, public liability insurance covers any bodily harm people sustain on your business premises, as well as any damage to their property. For instance, if a client who comes in for a meeting gets an electric shock in your bathroom due to faulty wiring.
Property damage
Property damage insurance is also known as “buildings and contents insurance.” It insures your business premises against calamities such as fires, floods, and storms. Usually, packages also include damage from vandalism, theft, and burglary.
Professional Indemnity
Depending on your business’ niche, you might also want to consider professional indemnity insurance, also known as “errors and omissions” or “E&O” insurance.
Especially if you advise your clients as part of your job, professional indemnity insurance is essential. If your advice – as a coach or consultant – leads to financial loss or reputational harm for your clients, professional indemnity insurance covers you if they decide to bring charges against you.
Product Liability Insurance
If your business produces goods, you should consider product liability insurance. This covers any damage caused by your product. For example, if you deliver a faulty electronic gadget that causes a fire in your customer’s home, they can bring charges against you.
Business Interruption
Business interruption insurance also sometimes comes under the name of business income insurance. As its name suggests, it helps you recover lost income if your business is forced to close temporarily due to circumstances such as a fire, flood, or building damage.
Cyber Insurance
Finally, in the modern business world, you should also consider investing in cyber insurance – especially if your business operates online. It will cover you if your network is hacked or client data is leaked. While this may sound like a remote possibility, more and more cyberattacks target small to midsize businesses, and 60% of them never recover from being breached by hackers.
Be Sure You’re Insuring Your Business Properly
Insuring your business properly is essential. With the guide above, you’ll be able to assemble the policies that best suit your business needs. Be careful when comparing offers – and to check out combined “business owner’s policies” (BOP) that typically cover both property damage and public liability and, increasingly, cyber insurance.
