A business owner is by nature a risk-taker. But there is a huge difference between taking a calculated risk and unnecessarily exposing your firm to events that could mean the end of its existence. Depending on the nature of your business, all it might need is a single lawsuit, accident, or fire to shut its doors forever. Let us take a brief look at the issues involved.
What Is Business Insurance?
It’s a special type of insurance that aims to protect owners against events that could occur during the normal course of their business. What these events might be, depends on the type of business. Broadly speaking, however, we are looking at things like property damage, contract disputes, and lawsuits.
Does My Small Business Need Insurance?
If you run a delivery service, the answer should be obvious. How would your business survive if a fire destroys all your delivery vehicles overnight? If you work from home as an accountant, you might think that small business insurance isn’t something you need. But what if you get sued for a million dollars by a client who suffered damages because of something you did or failed to do?
The fact of the matter is that there are very few small businesses that do not need some type of insurance. What exactly that insurance should be, depends on the nature of the business, the number of its employees, the premises from where it operates, and also whether it is structured as a sole proprietorship or an LLC.
What Types of Small Business Insurance Does One Get?
There is no single type of small business insurance that will fit all firms at all times. Which of the following you may need depends on your particular circumstances:
Commercial Property Insurance. This type of coverage helps to protect your business against events such as fires, burglaries, vandalism, etc. Apart from the property, it also typically provides coverage against loss of or damage to furniture, equipment, and inventory. It does, however, not cover events such as earthquakes or floods. If your firm is in an area where there is a very real risk of any of these, you will have to take out separate coverage.
Commercial Vehicle Insurance. If you or any of your workers use a car, truck, or another type of vehicle for business-related activities, commercial vehicle insurance is highly recommended and may be required. It will help to cover the cost of accidents, damaged property, medical expenses, injuries to third parties, etc.
Professional Liability Insurance. As the name implies, this type of insurance provides coverage against liability claims. These can vary from damages suffered by a client because of a mistake one of your staff members made, to a member of the public suing the firm because he or she slipped and fell on your business premises.
Other potential risks include defective products or installations. You will typically be covered against damages your firm is responsible for as well as any legal costs you might incur in the process.
E&O Insurance (Errors And Omissions). This type of small business insurance helps to protect you against negligence claims that might arise from failure to perform or other mistakes. It is particularly relevant in the case of service businesses such as lawyers, consultants, or doctors because it protects the firm against negligence and malpractice claims that are not covered by their general liability policy. This type of insurance often also covers your legal costs if you are sued by a client.
EPLI or Employee Practices Liability Insurance. The risk you could be covered against here is unfair employment practices. Examples include when your firm is found guilty of violating a worker or former worker’s rights, or a job applicant’s civil or legal rights. Even if you should be found not guilty, EPLI could cover the cost of your legal and other fees associated with the case.
Coverage For Key Employees. Some firms are completely dependent on the knowledge and skills of certain core employees. Losing one of them might make it impossible for the business to continue operating. If your firm has key employee coverage, the insurer will compensate you if one or more of these employees should die or become disabled.
Workers Compensation. If one or more of your workers are injured while on duty, this type of insurance helps to protect the firm by paying their lost salaries/wages as well as their medical costs. And in case a worker dies because of these injuries, it could also pay certain benefits to his or her family members.
Commercial Umbrella Insurance. Even if your business has an EPLI policy on top of its general liability coverage, there will still be certain limits to what you can claim. Any amounts over and above these limits will have to be paid by the firm. If you buy commercial umbrella coverage, however, it will supplement your other types of liability insurance with a (typically large) amount of additional coverage.
How Superior Insurance Can Help with Your Small Business Insurance
By now, you should have a fairly good idea of the different types of insurance cover that are available to your firm. But to know what exactly is available from the different insurance providers and get a recommendation based on your specific needs and budget, you are going to need an independent insurance agency like us. Because we do not work with only one insurance company, we can objectively assess your needs and recommend the most appropriate deal. If you have any questions at this stage, please feel free to contact us without delay.
