All small businesses face a number of risks, both accidental and intentional. Property or financial losses, lawsuits, workplace accidents, technology issues, and product liability claims are all detrimental but natural aspects of running a business.
Small business insurance can help to lower the risk level for your company and help protect you if an unexpected accident occurs. Though many accidents are unavoidable, you can still take the measures necessary to protect your business by investing in enough small business insurance to cover your potential losses.
Develop a Plan for Risk Management
Though some industries naturally carry more risky operations than others (think construction versus office work), be sure that your business is equipped with a comprehensive risk-management plan in case of an emergency.
- Risk management software like MethodWare’s Enterprise Risk Assessor and Risk Wizard can give you a complete report on your business’s risk probabilities.
- You can also work with a professional risk-manager in person. The Global Association of Risk Professionals (GARP) or the Professional Risk Managers Association can provide you with more information.
Once you have determined you business’s overall level of risk, you can begin to determine what types of small business insurance you will need. There are a number of different types of insurance coverage available for small businesses.
When assessing your need for risk management, consider hiring a workplace safety professional to give you a well-rounded assessment.
Types of Liability Insurance
One of the most fundamental measures a small business can take to protect itself is by investing in liability insurance. General liability insurance provides protection against legal hassles associated with accidents, injuries, and claims of negligence against your company by your clients or customers.
- Product liability insurance is necessary if your business is distributing a product that could potentially cause harm to your customer, including product defects or financial loss as a result of the product.
- Professional liability insurance protects your business in the event of claims of negligence, malpractice, or errors and omissions in your service to your clients.
Protecting Your Property
Property insurance is also a good idea to obtain to protect your business property. “Property” refers to all of the different equipment and materials you have invested in to keep your business running.
- Property Insurance covers your physical space of operations in the event of damage due to fire, vandalism, severe weather, etc.
- Commercial auto insurance covers whatever automobile you use for business purposes, or fleet your business uses for delivery or transport.
- Home-Base business insurance is of the upmost important for small-businesses that operate out of a place of residence. Homeowner’s insurance policies generally do not cover business losses, so if you are running things from home, be sure your business is covered in some way.
Protecting Your Employees
If you are an employer, it is required that you provide some sort of insurance coverage for your workers. In 2012, the average employer costs for insurance benefits were $5.02 per hour, or 12.1% of total compensation.
- Workers Compensation varies in coverage depending on the area you are located in, but some form of it is always required from employers. Worker’s comp covers medical expenses or wage replacement due to injury while on the job.
- Unemployment Insurance tax provides employees with some sort of wages if they are laid off. Unemployment tax also varies by region.
- The U.S. Department of Labor's Occupational Safety and Health Administration (OSHA) offers free on-site consultations for small businesses about safety hazards in the workplace.
Small business insurance requirements may vary depending on your location, but nonetheless you should invest in enough business insurance to keep your company fully protected. Liability, property, and worker’s comp insurance are all fundamental types of coverage that could determine whether or not your business survives in case of an emergency.