I was reviewing a dataset for a work project on small businesses; when I realized a large number of those businesses do not have business insurance. Regardless, of the reasons put forward by the owners in the survey, this situation is alarming. That is because running a business exposes business owners to all sorts of challenges that could destroy a business. For instance, unexpected problems like a fire, severe weather, theft, or a lawsuit could financially bring an end to a business. Because you never know what could happen to your business, it is important to be protected. Let’s learn more about this insurance and why it is absolutely critical for small businesses to get coverage.
What is a small business insurance?
A small business insurance policy is just like any ordinary policy. However, this specific policy helps small businesses with any unexpected cost related to property damage and liability claims against their company. Actually, just like you have health insurance that covers when you are sick your business also needs insurance.
Why is a small business insurance important?
Imagine closing your shop after a long day just to find out the next morning that someone broke into your shop and took away all your inventory. Even more concerning, you get a call at 2h00 am that your business is burning. More, a competitor sues you for patent infringement. These are some examples of unexpected events that could force you to shut down your business for good. The main reason is the cost related.
For instance, in the event of a fire that decimated your warehouse, except you have a lot of cash seating around, it would be tough for you to get back on track. Nonetheless, if your business has an insurance policy that covers that damage, you can not only recover fast but in some cases get enough money to rebuild an even bigger warehouse.
In essence, you never know what could happen hence you want to get the appropriate coverage for your business.
What are the different types of small business insurance?
If you are wondering what types of small business insurance you should choose? You should consider the following variables, the scope of your business, your industry, your location, and your operations. In reality, this specific type of insurance falls under 03 main categories:
- General liability coverage
- Workers’ compensation coverage
- Commercial coverage
1. liability coverage
a. General liability coverage
The general liability coverage is the main protection policy. At a minimum, you should strive to get that coverage. Because it protects your business from claims of bodily injury or property damage. In addition, they can also help cover claims of libel, slander, and defamation.
As an illustration, if a person slips and falls while shopping in your store, this type of coverage can help pay for their medical bills. Indeed, without it, the company has to pay these costs out of pocket.
b. Professional Liability Insurance
Typically, this coverage is suitable for any licensed businesses or individuals providing professional services. Normally, it both covers you and your employees. As a result, if you or your employees make a mistake while providing a service, professional liability insurance can help protect your finances. This is also known in the insurance world as errors and omissions insurance.
2. Workers’ compensation coverage
Workers’ compensation insurance is geared towards your workers. In sum, it helps provide benefits to your workers if they have a work-related injury or illness. Usually, this coverage helps pay for many things such as:
- Medical care
- Lost wages if your employees need time off to recover
- Disability benefits
- Funeral expenses
For instance, if your warehouse employee lifts too many heavy boxes and gets tendonitis, this coverage comes in handy as it helps pay for their medical treatment among other expenses.
3. Commercial coverage
This category of insurance helps protect your physical assets and your income.
a. Commercial property insurance
This helps protect your business’s physical location and other assets, like
b. Commercial Auto Insurance
If you have any commercial vehicles, you’ll want commercial auto insurance. This policy helps cover accidents if your worker is using your company’s van for deliveries and accidentally hits a customer’s car, this coverage can help pay for the damages.
This insurance is especially important if your business:
- Own company vehicles
C. Business Income Insurance
Business income insurance helps replace lost income. Typically, from natural events such as fire, wind damage, or theft. Consequently, if you have to temporarily shut down your business due to a fire, this coverage can help pay for your lost revenue.
4. Other coverages
- Employment practices liability insurance
- Management liability insurance
- Cyber liability insurance
- Data Breach Insurance
Every business faces certain hazards and risks. Hence, it is important to get the right small business insurance coverage that meets your needs and protection. You want to have your business running even in the event of any unforeseen challenges.