It is important for business owners to zero in on the types of insurance their business actually needs. Here are eight types to start.
It’s difficult for many business owners to discern which types of insurance are truly essential. There are so many types of insurance, covering everything from specific appliance malfunctions to unlikely disaster scenarios.
Businesses with limited budgets can feel understandably overwhelmed with the options. As a result, it’s important for business owners to zero in on the types of insurance their business actually needs. Here are eight types of insurance your business needs:
Related Article: 9 Ways to Save Money on Business Insurance
Regardless of whether your business is in an office or at home, you'll need property insurance. It will cover computers, inventory, tools and other equipment used for your business in the case of emergencies, such as vandalism, theft and fire. Several types of property insurance will reimburse for loss of business income.
Insurance for damage resulted by natural disasters like earthquakes or tsunamis are typically not included with most forms of insurance. You’ll have to pay an additional cost, but depending on your area it will certainly be worth paying for if your business’ location is prone to natural disasters.
A business could find itself in ruin if an employee is injured on the job and the business doesn’t have worker’s comp. It provides insurance to employees injured on the job, which protects business owners from legal complications.
In fact, it's illegal to not have worker's comp if you have W2 employees. Of course, you should always make sure you’re compliant with OSHA safety regulations. Worker's cCompensation laws vary by states, so be sure to look up what laws are relevant to your business.
Related Article: Why Even a Small Business Needs Workers' Compensation Coverage
General Liability Insurance
Just as worker’s comp protects you if an employee is injured, general liability insurance protects business owners if a customer is inflicted bodily harm or property damage by a product or service affiliated with the business. Several businesses who neglected to purchase general liability insurance are facing class action lawsuits due to their negligence.
Product liability insurance is similar in that it protects businesses that create and distribute products that cause harm or injury due to a defect. Even businesses that obsessively ensure that each product is up to standard can encounter a faulty product or two if they are mass producing.
Even if it’s one faulty product out of thousands there’s potential for legal ramifications, which is why product liability insurance is another form of liability insurance to strongly consider.
In some forms of insurance, this can also be addressed via a general business liability insurance policy, which is a fairly all-encompassing form of insurance that protects a business owner and their employees from property damage, medical costs, injury, libel, slander, legal fees and settlement bonds as a result of alleged damages. It's a package that should also be considered by many small business owners.
Commercial Auto Insurance
Any growing business is going to require transportation at some point. A business' vehicles can be costly, so auto insurance for these vehicles specifically via commercial auto insurance is a wise idea.
If your employees drive their own vehicles, it's recommended to look into non-owned auto liability, which will protect the business if the employee is without his or her own insurance. Of course, as an individual it’s important to have personal automobile insurance as well.
Data Breach Insurance
We live in a digital age where nearly all employees’ personal information is stored digitally. Businesses can cover themselves in case this data is leaked or hacked into with data breach insurance, also known as cyber liability insurance.
Everyone from major business to school boards have gotten out of messy legal situations with data breach insurance. It’s something any savvy business would strongly consider.
Home-Based Business Insurance
This one only applies to business that operate from home, but it’s still worth considering for the 52% of small businesses that are home-based, especially since the insurance can cover property damage and business items in case of theft or a natural disaster.
Personal Umbrella Policy
A personal umbrella policy is a good idea for many business owners since it anticipates the worst-case scenario of something occurring that would require more than another insurance method’s limits. Insurance limits are common with all types of insurance, from car accidents to business expenditures, so a personal umbrella policy can prevent a lengthy mishap via a personal umbrella policy.
It’s costly - often available in million-dollar increments from $1 million to $5 million—but business owners who can afford it will provide themselves with a safe peace of mind.
Considering that there are many more forms of insurance than the eight above, it’s not surprising that many business owners are intimidated with the sheer number of options. However, as long as you focus on the eight types of insurance above, your business will be secure in the case of an on-job injury, accident, or natural disaster.