Business insurance can offer proper protection at opportune moments. This guide has details on its value for your small business.
Are you worried about accidents, weather disasters, or possibly even lawsuits?
These are potential realities of a business, but there's something that can protect your small business from the unthinkable...
Business insurance. And with the right provider, it can be one of your better investments!
Today, we'll go over what business insurance is, why it matters, and how to choose the right provider.
Table of Contents:
- What Is Business Insurance?
- Why Is Business Insurance Valuable For Small Businesses?
- How Can Small Businesses Get Business Insurance?
- Wrapping Up On Business Insurance For Small Businesses
What Is Business Insurance?
Business insurance is a form of risk management. It's insurance that protects you from financial harm that can result from:
- Property and equipment damage
- Accidents
- Natural disasters
- Professional and practice errors (E&O)
- Lawsuits
With business insurance, you'll get different forms of coverage, and pricing will differ depending on what you get.
And remember: business insurance is separate from your business structure.
For instance, maybe you recently formed an LLC for your restaurant. That LLC will protect your personal assets in the event of a lawsuit, but your business assets are still at stake.
Business insurance is designed to protect your business assets.
Depending on your industry and whether or not you have employees, you may be required by law to have certain types of insurance, such as unemployment and worker's compensation insurances.
However, many new business owners don't even think about business insurance. This is usually simply because they aren't familiar with the many types of risk that any business faces. (Think you only have happy clients? Do you believe your kind of product is non-hazardous and therefore your business can't get sued? Think again!)
Now that you know what it is let's talk about why it's valuable.
Why Is Business Insurance Valuable For Small Businesses?
Business insurance gives you freedom from worrying about unanticipated risk.
Everything could be going well in your shop, but one customer injury or a single service error by a team member could be costly.
And if you're running a brick and mortar operation, your insurance must include hazard protection from the risks associated with events like snowstorms, fires, and much more.
As a new small business owner, there's a good chance you're just learning the ropes of how to run a business. Insurance can be a helping hand if certain things don’t go as planned, resulting in negative claims against your business.
Like all forms of insurance, business insurance is equivalent to airbags in a vehicle. You're glad that you have it when a situation arises, and it can make bad events less costly.
With that said, let's look at examples of business insurance that small businesses typically need.
What Are Examples Of Business Insurance For Small Businesses?
Here are popular types of business insurance adopted by a wide range of industries.
General liability
General liability insurance can apply to most businesses and covers a wide range of potential risks such as:
- Property damage
- Medical expenses
- Business slander
- Lawsuits
- Injuries
Whether your business is based on a product or a service, general liability insurance covers many situations.
Commercial property
This form of insurance is ideal if your business has its own physical property and important assets like equipment, furniture, and technology infrastructure.
Commercial property insurance protects from natural disasters, vandalism, fires, and other risks to physical property.
Commercial auto
Commercial auto insurance provides coverage for businesses that use vehicles to deliver products and services. It can be helpful, for example,l for businesses like trucking, roofing, cleaning, and delivery companies.
You'll typically find commercial auto insurance to protect from physical damage of vehicles and the medical expenses of occupants.
Product liability
This form of insurance fits businesses that wholesale, manufacture, or ship products to their customer base.
If you're running an online product-based business and have monthly orders, product liability insurance can cover losses due to damaged or lost products.
Professional liability
Professional liability insurance supports service errors done on your business's behalf. This can include medical malpractice and negligence. In some cases it is called errors and omissions (E&O) insurance.
This coverage can extend to any wrong or ill-resulting information you give to customers or clients. It will also cover mistakes by employees or board members that result in lawsuits against the business.
Worker's compensation
If you have employees, worker's compensation is required to cover their medical costs in the aftermath of a workplace injury or illness.
Be sure to look at your state's worker's compensation requirements, or consult with a licensed insurance agent to help determine the right coverage.
Home-based business
Many small businesses start in a home or apartment.
If this sounds like you, then home-based business insurance helps cover any business equipment you store at your residence. It also covers any claims for personal injury and damage to other people's property.
Depending on your provider, this form of insurance will typically cost less than general liability insurance.
How Can Small Businesses Get Business Insurance?
Read these quick tips on navigating business insurance for the first time!
1. Think About What You Want To Protect
You should start by pinpointing the things you need to protect. If general business insurance isn't enough, you could think about:
- What assets you want to protect
- How and where your business operates
- What weather conditions occur where your business is located
- What other threats could potentially affect your business
- What state and federal insurance laws apply to your industry
- Past "close calls" (Where do you need to learn from the past?)
- Hypothetical scenarios – could one angry customer destroy your business?
These points will help you assess risks and better pinpoint the type of business insurance to look for. They'll will also power the questions you'll ask when you speak to a licensed agent.
2. Find Agents And Compare Quotes
You can look online to find companies that provide the type of business insurance you're looking for.
Plan to speak to 3 to 5 agents so you can get a good sample and compare quotes and terms.
Also, feel free to ask as many questions as possible, especially around potentially hidden fees or what hazards your insurance doesn't cover.
Don’t skimp on insurance. The risks are real. But don’t buy more than you need.
Sometimes, agents are middlemen and don't represent the insurance companies themselves, which could lead to their pushing you into insurance products you don't need.
3. Choose Your Insurance Based On Your Type Of Business
Once you've combed through multiple quotes, it's time to choose the insurance provider based on your needs.
4. Continually Assess Your Needs
Once you have your insurance in place, it’s easy to set it and forget it. However, it's still essential to assess your need for it as time goes on.
Things change. For example, maybe you're going from a physical business to entirely online and no longer need physical property protection. That's a big example, but small things can change, too; resulting in your needing more coverage or less.
It’s a best practice to assess your insurance needs each quarter or each year to make sure your coverage still makes sense.
Wrapping Up On Business Insurance For Small Businesses
Business insurance can help small businesses avoid harmful incidents that can impact their long-term growth.
Not all insurance is made (or priced) equally, so going into your insurance adoption with helpful information will make the process smoother.
There are trusted and vetted insurance agents and brokers in this network. If you don’t know where to start, reach out to one of them! This network is about connecting you with the services you need – as well as the people who need your service.