A business whether it is big or small needs insurance coverage that will protect it against different types of risks your business can face. Doing business is a risky job. From the first day, you start as a business owner, your business and you expose yourself to certain types of risks. So you need to have the right kind of insurance that will protect you from lawsuits or unexpected events. One lawsuit or unexpected event can finish the business even before it starts. Luckily businesses have a wide range of insurance policies to protect themselves from incoming problems. Let us discuss some insurance policies you need for a small business.
Also read: What is business insurance? is it necessary?
8 Insurance Policies You Need For a Small Business!
#1. Property Insurance:
Property insurance is a type of policy that gives coverage to your machinery, tools, furniture’s and other necessary equipment, from the storm, and theft. It protects your business’s building and personal properties. Flood, earthquake are generally not covered in this type of insurance policy. So if your business establishment is situated in those places you should consult with your insurer for a separate insurance policy. Normal property insurance will not cover you in those circumstances. A few companies grossing high in this insurance are AllState, MetLife, etc.
#2. Professional Liability Insurance:
Profession liability insurance is also known as errors and omission (E & O) insurance and covers your business against negligence claims. It can happen through mistakes or failures. Suppose your company made an error. Due to this, your client suffered a huge loss. Professional liability insurance will help you cover the cost of your client makes a claim. If the customer sues you and you are not guilty in that case this policy will help you in your legal battle.
#3. Workers compensation insurance:
Worker’s compensation insurance covers the expenses of the workers who are unable to work anymore. Someone got hurt badly while performing work in your business. You are liable for their future. This type of policy helps you to compensate for the worker. If your business is a low-risk business, still you should have this insurance policy. A minor slip and fall situation can cause permanent damage to someone. If the worker’s family sues you for more compensation this policy will cover your court costs too.
#4. Vehicle Insurance Policy:
In your business, if there is a usage of vehicles you should insure it. Suppose you met with an accident then the vehicle insurance will cover the cost of damage. There are two types of vehicle insurance. First-party insurance will cover your vehicle damages. And also cover the damage you have done to the other party involved in the accident. Third-party insurance will only cover the damages of the other party. On the other hand, if your employees are using vehicles for the office purpose their vehicle insurance will cover the losses.
#5. Business interruption insurance:
This type of insurance comes in to effect if there is any kind of interruption in the business. Due to some natural disasters, you are forced to shut down your business for a certain period. Your employees won’t be able to work. This type of insurance is done for manufacturing units, call centers where employees are required to be present physically. Business interruption insurance helps you to overcome the losses that occur due to shut down. It pays your workers’ wages and also helps you to recover from the losses.
#6. Product liability insurance:
Product liability insurance is a must if you have a manufacturing company. Although you take every possible step to minimize your errors, one mistake can attract a lawsuit against your company. In such cases, product liability insurance helps to protect your business product. It helps you to fight against the lawsuit and pays for your legal expenses.
#7. Home-based businesses:
Usually, small scale businesses start from home. Homeowner’s insurance doesn’t cover your business. So if you want your business to be insured you should apply for commercial property insurance. If you want additional coverage to protect your equipment and tools ask your financial advisor for some other insurances.
#8. Surety and Fidelity bonds:
Surety in a type of bond between three parties that helps you ensure a project completes in time and guarantees payment if they are not made. If someone from your workforce does fraud or steals, a Fidelity bond protects your business from financial losses. This type of insurance is also necessary for you. It helps you to recover from the losses.
What is a Small Business Owner’s Policy (BOP)?
It is a type of packaged policy. The small Business Owner’s Policy allows you to protect your small business from property damages, loss of income due to some unexpected events and verity of liability claims. It is the right kind of business policy that offers you good support towards protecting your small scale business. Buying BOP is better than buying insurance separately. It costs you less money. Managing one policy is also more convenient than managing each policy separately.
Business insurance can help you to protect yourself from the above-mentioned scenarios. But business insurance doesn’t cover you from natural disasters, floods, and other types of major natural calamities. It won’t cover you from intentional damages. A standard insurance policy will not cover everything but if you add coverage riders to the standard policy it will help you to cover additional losses. Doing business is a tricky job. You can gain a lot if your business is a success. Otherwise, you will end up losing everything that you have. So you must insure your business. It will help you to recover from the financial losses and also protect you from lawsuits.
In this article, we discussed the insurance policies you need for a small business. If you like this article do share it with your friends. Feel free to ask related questions in our comment box below.