It’s tempting to cut costs when looking at the price tag of running a business. However, when it comes to insurance, you might find it enticing to sign up for only the necessary legally required coverages. Unfortunately, one uninsured accident can mean paying damages and lawsuit settlements straight out of your own pocket. Plus, you’ll likely face higher premiums to insure your company going forward. In some extreme scenarios, you might end up losing your entire business.
There are several insurance options to choose from for your organization, making deciding on coverage time-consuming. Your best bet is to sit down and analyze your company’s particular needs and make coverage choices best suited to meet those demands.
Why You Need Business Insurance
Accidents, by nature, are unforeseen. When the worst happens, you want to minimize your liability. One of the best ways to do this is through business insurance. However, one insurance policy can’t fit all the potential liability scenarios your business will face. Luckily, several coverages exist that can cover all the bases and enhance your risk management strategy.
Below are the primary insurance policies designed to protect your company’s best interests, employees, and clients.
General Liability
Also called business liability insurance, this coverage protects your business from third-party claims involving bodily harm and property damage. Many states require companies to carry this policy type, however, it doesn’t protect you against employee injury claims.
Commercial Auto
Companies rely on vehicles to conduct their business. If this is true for you, commercial auto insurance is necessary since your personal car insurance won’t cover accidents or damage related to your business.
Business Interruption
Business interruption insurance is a popular coverage option. It can help you reclaim lost income and continue to pay general operating expenses if there is a disaster that causes your business to shut down. Depending on your policy’s provisions, these disasters could be floods, fires, collapsed buildings, or theft.
Workers’ Comp
Worker’s compensation insurance absorbs claims related to workplace injuries and pays for associated medical costs and lost wages. In nearly every state, if you employ more than one person, this is legally required coverage, though guidelines vary. Check out this comparison of policy standards state by state.
E&O Insurance
Does your business offer professional services? If the answer is yes, you’ll want to get errors and omissions insurance. This insurance will protect you if a patron claims your business caused them financial damages that your regular liability insurance doesn’t normally cover.
Cyber
In this digitally-driven world, all business owners should protect their technology and data by securing cyber insurance. This means if your business information gets compromised, the financial damages get covered by this policy, including the recovery process expense.
Business Owners Policy (BOP)
BOP, or business owners policy, is a potpourri of property insurance, general liability coverage, and business interruption protection. Insurers offer these bundled together at a lower price than purchasing them individually. Plus, it’s possible you may be able to add in additional policies, such as employers’ liability insurance.
Product Liability
It’s often the case that small businesses need product liability insurance. This coverage protects your company against claims against your goods causing damages. In addition, if faced with a lawsuit or alleging injury or damage, your policy will cover some of your defense costs and payout claims and judgments related to the case.
Determining the Coverage Your Business Needs
The laws governing your state and industry will be the first coverages you need to acquire for your business. To figure out other coverage demands, speaking with an insurance agent can help you determine the best coverage for your needs and further minimize your liabilities.
Getting started is easy. Follow these steps:
1. Assessing Your Legal Obligations
Step one, carefully analyze and evaluate your business to determine your insurance needs. What insurance are you legally required to have? What additional liabilities do you need to consider?
For example, if you run a jewelry store, you would want to insure against theft. Or, maybe you run a barbecue catering service. You would probably want a general liability, commercial auto, and worker’s compensation policy.
Don’t hesitate to speak with an insurance rep about your options when in doubt. They’re likely familiar with your industry and have a good idea of what coverages you should consider maximizing protection for your company.
2. Know Your Business Risks
It’s essential to analyze your liability and risk. This analysis will help you determine the best insurance to protect your business. A good illustration of this is an office complex located on the first floor of a multi-story building. If a fire breaks out and your office and equipment are destroyed, you need an insurance policy that will replace and/or repair your lost assets. Commercial property coverage ensures the structure gets repaired or rebuilt if you own the building.
3. Find the Right Balance of Coverage
One worry that many business owners have is whether they have too much or too little insurance coverage. A great way to determine just how much protection you need is to consider the risks your company faces and the likelihood of each occurring. Also, consider how much financial damage you could suffer if one of these events occurred. With these considerations in mind, you’ll better understand how much insurance you need.
Business Insurance is Key to Long-term Success
Businesses must have adequate insurance to protect customers, employees, and their bottom line. Having this protection can mean the difference between a claim being covered by your insurer or having to pay the claim out of your own finances, potentially bankrupting your company. All it takes is one uninsured accident to cost your business tens of thousands in damage claims, so don’t wait to get insured until you need it.
