Do you have small business insurance? What does it include? Can it be specialized to fit your business needs? A small business is a privately owned venture which has very few employees. It could be comprised of only the owner, or have 500 employees and still be considered “small.” Owning your own business can be very rewarding, but there are many items to consider before beginning operations. At the top of the list should be protecting yourself from any future risks or liabilities. That’s why there are various small business insurance coverage types to consider.
A recent study found that there were between 25 and 27 million small businesses in the United States. That’s almost 80 percent of all jobs. Just think about the impact that has on the economy and what would happen if small businesses folded because the owners didn’t purchase the right insurance.
There are several types of insurance that all small businesses should consider: commercial general liability and property insurance (which can be combined under a business owner’s policy), and professional liability coverage.
Commercial general liability insurance protects businesses from liability claims related to third-party injuries and property damage from the premises, operations, or products. Accidents can and will happen, and having the right insurance will help to cover costs related to medical expenses and lawsuits. Property damage includes incidents caused by you or your employees and damage to items that you rent. So, if you own a small shop and a customer slips and falls on the floor, you may be required to pay for their doctor visit and procedures. If they miss several weeks of work recovering from their injury, you may have to pay for their lost wages as well. With general liability insurance, much of these expenses will be covered.
Commercial property insurance covers a different set of incidents. These include fire, damage from poor weather conditions, and vandalism. The policy will help to cover the costs to repair or replace property, including the building itself and its contents. It also covers the loss of business income while the repairs are being made. There are two types of property insurance: all-risk and peril-specific. As in the name, an all-risk policy covers a wide variety of incidents, except for those specifically excluded in the coverage details. A peril-specific policy only covers the business losses related to incidents named in the policy, for example, fire or theft.
Both general liability and property insurance can be combined into a business owner’s policy (BOP). It also includes business interruption insurance, which covers income lost as a result of a catastrophe. Only small businesses are eligible, and this is a way to bundle your coverage with the same insurer and save some money.
Professional liability coverage covers your small business from any errors and omissions lawsuits. If your business makes specific products, recommendations, advice, or if it involves the care of others, then you should consider purchasing this type of policy. There is a possibility that a client may sue you if they believe that the service was not performed correctly or caused them harm. The policy will help cover any legal costs.
Of course, there are many other insurance options available, depending upon the nature of your business. Set up a meeting with your independent insurance agent to discuss how you would like your business to be protected. Some additional coverage may include (but is not limited to):
- Employment practices liability coverage
- Workers’ compensation coverage
- Business auto insurance
- Commercial property insurance
- Business crime insurance
- Specialized liability policies
- Umbrella policies
Several forms of insurance for your business are discussed in more detail using the links below.
Many small businesses set up an LLC, or limited liability company, as a way to separate their business and their personal assets. Under an LLC, the business pays taxes separately from your annual personal taxes, it has its own bank account, and creates a separation in liability. If there is an incident and you are held liable for the costs, an LLC will protect you from having to use your personal assets to pay the bill. Depending upon the state in which your small business operates, there will be different requirements for LLC coverage.
Individuals that are self-employed work with clients or other businesses but are not an employee of a business. Approximately 10 percent of working Americans are self-employed. These entrepreneurs are motivated to create services and/or products for the marketplace, but they also have unique insurance needs. Self-employed insurance can include coverage ranging from liability to life insurance.
Often in small businesses, life insurance is one of the last considerations. However, it is important to the continued success of the company you have established. It can serve as both an advantage to prospective employees as well as a means to ensure that the business can continue without you, in the event of your untimely passing. Policies you may want to consider include group life insurance, key person insurance, and buy/sell agreements.
An independent contractor is a small business owner that works for other businesses, providing goods or services, on a contractual basis. This can include everyone from an accountant to a private investigator to a truck driver. Depending upon the nature of your work, certain insurance policies may suit you better than others. Independent contractor insurance is designed to incorporate protection from a variety of risks.
Many individuals who own their own business prefer to operate out of their home. In fact, almost 30 percent of homeowners operate a small business. If you fall under this category, consider purchasing home-based business insurance. Relying on your homeowners policy is not a great idea. It only covers a few thousand dollars in damages and nothing for liability.
While the majority of people want an agent involved in their purchase of insurance, many people want to see if they can save money by buying direct from the insurance company. Others want to try a direct quote to make sure the premium they’re now paying through their local agent is fair. If you want a quote for your coverage, click on the competitive quote button on the right side of this page.