When starting a business, one of the first considerations should be taking out the appropriate insurance policies to protect your company from any potential disasters. Thankfully, there are different types of policies that will cover different areas of your company ensuring you’re protected from any unforeseen events. However, with so many types of insurance policies for businesses to choose from, it can be difficult deciding which ones you actually need and which ones you can live without. The below guide has been designed to help you identify the most essential small business insurance policies.
Professional Liability Insurance
Professional liability insurance protects your business from the financial consequences of claims, lawsuits, and legal judgments arising from your professional activities. Professional liability insurance is a type of liability insurance that covers you against claims that you may be legally liable for harming someone or damaging their property while performing your job duties. It is commonly used by accountants, architects, lawyers, doctors, and other professionals.
Cyber Liability Insurance
Cyber liability insurance covers your business in the event of a cyber breach. Cyber attacks can happen to anyone, and they can be devastating. Cyber liability insurance works similarly to traditional liability insurance in that it reimburses businesses for financial losses caused by third parties who intentionally cause harm through illegal use of their property or services. For example, if someone hacks into your website and steals information or damages your website, this type of insurance would reimburse you for costs incurred as a result.
General Liability Insurance
General liability insurance is an insurance policy that protects you and your business against claims of bodily injury, property damage, and other losses that may occur from your operations. General liability insurance is a broad-based commercial coverage that can protect your small business from financial losses due to the actions of your employees, customers, or vendors.
Product Liability Insurance
Product liability insurance is a type of commercial general liability insurance that protects you from lawsuits relating to injuries caused by your products. If a customer uses one of your products, such as a cellphone or a coffee machine, and it malfunctions, causing injury or death, you could be liable for damages. Product liability insurance covers these claims.
Business Interruption Insurance
Business interruption insurance is a policy that will help you recover from losses if your business is forced to shut down due to a covered event. This type of coverage can also protect you if you have to relocate your business because of damage or destruction. Business interruption insurance is designed to pay for lost income and revenue that are related to the interruption or shutdown of your business. The policy will also reimburse expenses for temporary relocation, repair, or replacement of damaged property, as well as provide funds for additional expenses associated with operating out of a different location.
Workers’ compensation insurance is a mandatory type of insurance that covers your employees if they’re injured on the job. It also covers you, the employer, if one of your employees sues you for personal injury because of an accident at work. Workers’ compensation insurance is not the same as health insurance and must be purchased separately.
Commercial Property Insurance
Commercial property insurance is a policy that protects your business against damage to the building, its contents, and business interruption. It also covers liability to third parties for injuries and damages caused by your employees or contractors.
Business Owner’s Policy (BOP)
A Business Owner’s Policy, or BOP, is a type of insurance that covers the basics of your business. It usually includes property insurance, liability insurance, and workers’ compensation coverage. It’s designed to be a more cost-effective alternative to purchasing all of your insurance policies separately. A BOP doesn’t cover everything and no two BOPs are the same. Be sure to understand your business’s BOP before proceeding with that coverage.
Business owners have to bear in mind that their businesses have unique needs and the different types of coverage are tailored to those needs. There is no such thing as a one-size-fits-all policy. Make sure that you get the right amount of coverage for your small business to grow and succeed.