You've invested a lot of time, money and sweat in your small business, so it makes sense to protect that investment with smart and professional insurance coverage. In fact, business insurance should be an essential part of your business operations -- a necessity for safeguarding your business assets, your employees and your livelihood.
What coverage do you need?
Business insurance policies come in many forms to cover many needs. Several factors determine what coverage you'll need and the rate you'll pay, such as the nature of your business, whether you operate from a commercial building or home office and whether you have employees. Below are the most common types of insurance coverage that small businesses need:
- Property insurance: Property insurance covers your buildings, equipment, inventory and other contents. You especially need this type of insurance if you own a storefront and house a lot of inventory all in one place.
- Liability insurance: What does liability insurance cover? If you have customers visiting your business, general professional liability insurance protects your business in the event a customer is injured on your property. It also pays for your legal defense if you face a lawsuit because your product or service causes harm. If you provide services that could cause others' financial loss, you also may need professional liability coverage. Malpractice insurance is a type of professional liability insurance which is mostly used by medical professionals, but can be used by other professionals to help provide legal defense. Almost all businesses need this type of insurance if workers have direct interaction with or provide services to the public.
- Commercial auto: Commercial auto insurance claims can be devastating for businesses that aren't properly insured. If you or your employees drive company-owned or personally owned vehicles in the course and scope of business, you need commercial auto coverage. You need this insurance to avoid having an auto claim denied by your personal agent because your vehicle was being used for work purposes.
- Workers' compensation: If you have employees, you need workers' compensation insurance to cover medical expenses and lost wages arising from illnesses or injuries triggered by their work. Many states require you to carry this coverage so you need it to be in compliance with state law.
- Business interruption: If your business is unable to operate because of a covered property loss, business interruption insurance covers lost income during the downtime. You need this insurance to ensure the continuity of your business when outside factors adversely affect it.
- Disability insurance: If you own a small business, a disabling injury or illness could be financially devastating. Several income protection options are available for business owners, including business overhead expense insurance, key person insurance and bank loan disability insurance. You need this to protect you in the event of an injury that could impact your business.
- Health: Health insurance is important for you and your employees. And with the federal Affordable Care Act now on the books, it's important to understand your responsibilities as an individual and as an employer. Again, you may be legally required to offer this insurance. You also may need to have it to attract top quaiity talent.
- Life: If you have family members who rely on your income, life insurance will provide the money they need if you meet an untimely death. In addition, many lenders require you to have life insurance before giving you a business loan. You need this to protect your family from a loss of income in the event of your death.
- Key person insurance: This is a type of life insurance where your business is the beneficiary. A business normally takes this policy out on a key individual in the company. If that person dies, then the company receives the benefit to help keep the company afloat. This insurance is needed to protect your business and any income your family may receive from the continuation of a business after your death.
- Errors and omissions insurance: This insurance is a type of liability insurance needed to protect a professional who gives advice or delivers services. If a customer is adversely affected by bad information, this insurance can kick in to reimburse the client for any mistakes you've made. You need this to give clients confidence in your work and to know they are covered in the event of an errors you might make.
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