Just like any other insurance that covers you against unforeseen losses, Small Business Insurance covers your business assets, property and income against losses that may occur anytime in the future. It is also called Commercial Insurance.
Normally, a Small Business Insurance helps protect business by providing business property coverage, general liability coverage and business interruption coverage.
However, it is up to the Small Business Owner to get more cover for business assets and financial losses by getting a customized business owners policy (BOP) through the insurance company of choice.
What kind of insurance you need for a small business
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Buying small business insurance for your business can be full of confusion because you may not have full understanding of what you need to cover under your policy and what kind of insurance you should buy.
For some business such as healthcare related and other high risk industries such as chemical manufacturing business insurance is absolutely necessary to cover the risks.
But what about your small home based business or a small convenience store or if you are accounting firm or any other small business that you own, do you still need business insurance?
Let’s try to understand do you need small business insurance as a small business owner?
In the beginning when you had just started on your own you may be having a life insurance for yourself and that seems to be enough for you in case of any miss happening but as your small business grows the risks associated with it also grow and then ignoring small business insurance intentionally becomes a greater risk.
The common myth among small business owners is that by forming a LLC (limited liability Company) they’ll be afforded protection in the event of a lawsuit while they do not have the idea that under the LLC structure the liability protection is limited.
Suppose you break IP laws which were completely unintentional or you are sued by your employee for some reason or over a dispute, the LLC structure cannot provide you any protection against the potential losses and so small business insurance becomes a must.
It’s not that only LLCs need insurance, sole proprietor firms, partnership firms, S-corporation and type C corporations all need insurance to cover up any potential losses.
List of small business insurance types explained in detail:
General Liability Insurance – This is the first and the foremost small business insurance type you should always have as a small business owner as it protects you and pays for the damages in case you, your employees, your products or your services cause or alleged to have caused any kind of bodily injury or property damaged to a third party.
It is also important to note here that many times your clients may ask you for a general liability insurance certificate as an evidence to ensure that in the event of any miss happening his/her damages are paid for so if you do not have a General Liability Insurance yet, try to get one now.
Property Insurance – If you are the owner of your building where you run your small business or a home based business or own business assets such as inventory, furniture, office equipment and other technical tools then you should consider purchasing a property insurance now if your haven’t already purchased. It protects you against theft, fire, vandalism and other damages.
As a home business owner you must be aware that home insurance doesn’t always cover home based business losses or small business losses and you need additional riders in your home insurance to cover the additional risks.
A standard home owner policy will only cover upto $2500 worth of business equipment while in the event of miss happening your losses would be much higher than that and so, having a property insurance becomes a necessity when running a small business or a home based business.
Professional Liability Insurance – This insurance protects business owners against errors, malpractice and negligence in services that may cause damages to the customers.
This insurance is a must have for the businesses who provide tax and accounting services, insurance advisory services, financial advisory services to the customers and it is required by the physicians to carry this insurance as prescribed the state laws.
Business Owner’s Policy – BOP is a bundle of many different insurance policies such as property insurance, business interruption insurance, vehicle insurance and liability insurance.
Buying a BOP can be a good option compared to buying many different insurance policies for specific purposes as a bundle would cost less compared to the individual insurance policies.
BOP can also be customized by your insurance provider as per your specific business requirements and you can choose what needs to included in a BOP.
Product Insurance – This is a type of insurance which protects small businesses that are into manufacturing, distribution or retail products against any financial losses that may incur due to defected products that can cause harm or injury. Product insurance can also be grouped into general liability insurance.
Conclusion
Buying small business insurance can be confusing and may seem like a mystery because you do not understand its terms and conditions, what’s covered and what’s not, whether your business is protected or not and whether it protects you against financial losses or not.
You should always take help from a professional insurance broker and consider his/her advice before buying a small business insurance as they are experts in figuring out small business insurance requirements and can help you in getting a good cover for your entire business.
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I like that you said that I should get business insurance if I want to protect my assets from being lost. If I were to choose, I think I’ll get one from a good insurance company so that I can get the coverage that I need and save money as a result. It’s important for me to protect my building from being damaged, so I might insure that since it’s an important investment.
Thanks for sharing the information!