Business insurance is an important thing that should not be looked over when starting your own business. Just like with personal insurance, it is incredibly important to protect your business from any sort of damage that may occur during the business’s long lifetime. However, there are a number of things that need to be taken into consideration to make sure your business is as protected as it can be.
Evaluating Your Business
Before starting the process of choosing your business insurance, you need to evaluate your own business to determine what you will need. Look at the different types of assets you have and the risks that your business takes. Additionally, consider the budget that you have set aside for insurance (your premium).
Different Types of Insurance
As a note, this is not a comprehensive list of the numerous types of insurance that you may encounter when doing your research. These are just the most common types of insurance and when they would be useful.
General Liability
- General liability insurance is recommended for businesses of all sizes. It is a great starting point for business insurance. If your business is small enough (or you are just starting out), this policy may cover everything you need.
- It covers:
- Property damage as a result of your operations
- Customer injuries as a result of your operations
Professional Liability
- Professional liability insurance is recommended for businesses that provide any type of professional advice or services. This includes professions such as lawyers and accountants. This helps if a customer sues your business for dissatisfaction or lack of results.
- It covers:
- Lawyer fees for court appearances
Commercial Property
- Commercial property insurance is recommended for businesses that have any sort of physical building that they operate out of. That could include anything from a physical storefront where you conduct business to a warehouse that you store your wares in.
- It covers:
- Damage from fire
- Damage from water
- Damage from vandalism
- Any other sort of damage included in your specific policy
Cyber Insurance
- Cyber insurance is recommended for businesses that operate often online. It is especially important for those who store sensitive information for clients and/or customers. While having a good cybersecurity system may make you think this type of insurance is irrelevant, anything can happen since technology is always changing.
- It covers:
- Financial compensation to those affected by a data breach
Worker’s Compensation
- Worker’s compensation is recommended for businesses that have employees. In many cases, it is legally required for businesses to have while in operation. Research your local laws to make sure your business is in compliance. Your insurance agent should also know the local laws and should be able to help you make sure your business is compliant.
- It covers:
- Injury from work-related events
- Illness from work-related events
Commercial Auto
- Commercial automotive insurance is recommended for businesses that have vehicles, even if they are not regularly used. This insurance may also be legally required depending on where you live/operate. Again, your insurance agent should be aware of the local laws and will be able to guide you through this.
- It covers:
- Injury and/or damages caused by the vehicle
Commercial Umbrella
- Commercial umbrella insurance is a kind of catch-all insurance that is added on top of any insurance that you already have. It can be useful when it comes to bigger expenses that your other policies may not cover in their entirety. The exact wording of your policy will define what it covers for your business.
Comparing Different Policies
Once you decide what types of business insurance will be best for your business, your next step is to find the best insurance provider for you. There are a number of providers for each type of policy you could possibly need. It is important to take into consideration the price of each (both premium and deductible amounts). As with personal insurance, business insurance providers often offer specials or discounts for having multiple policies with the same provider.
Before you sign on the dotted line, be sure to review the exact wording of your new policies to make sure you and your insurance provider are on the same page when it comes to what is covered and what isn’t.
At the end of the day, having business insurance will provide both you and everyone you work with peace of mind. If something goes wrong, your business will not be solely responsible for paying for what needs to be done. You should periodically review your policies to make sure they are still appropriate for your business’s size and offerings. Business insurance can be confusing but is a necessary step that shouldn’t be skipped when it comes to running your business.
