Just because you run a small business doesn’t mean you’re immune from risk. In fact, you’re just as responsible for potential issues like personal injury as are big corporations. However, while large companies have the money to spend on lawyers, a small business might operate by the skin of its financial teeth.
Enter small business insurance. The right insurance can protect a company against the financial impact of claims and lawsuits, plus other risks that it doesn’t see coming. Also known as commercial insurance, there are several types of small business insurance that are engineered to protect against a variety of potentially damaging situations.
That said, how exactly does small business insurance work? According to a recent report by Insurance Ranked, business or commercial insurance is designed to protect small and large businesses from covered losses and dangers. Policies normally cover liability, asset damage, liability settlements, supply chain issues and disruptions, and other typical business expenses. A small business can expect to pay upwards of 10 percent of their annual revenue for necessary insurance. But it can save bundles down the road.
There is said to be no “one-size-fits-all” business insurance policy, even though small businesses may be eligible for a convenient Business Owner Policy, or BOP, bundle. Every small business owner should carefully consider which policies they need to legally comply with in order to operate at a level of acceptable risk.
Types of Business Insurance Small Business Requires
Property Insurance: Small business property insurance is considered a broad term for insurance that will protect physical assets like equipment, inventory, and even entire buildings. Property insurance covers a wide range of dangers and perils, including the following: Fire damage, theft, vandalism, natural disasters, and more.
Liability Insurance: It’s highly recommended that businesses of any size purchase liability insurance. If another party files a liability suit against a small business, it can cost upwards of $75,000 in legal fees, plus the settlement. Due to the prevalence of liability claims, many small businesses make sure to obtain general liability insurance initially over all other types of commercial insurance.
General Liability Insurance: General liability covers personal injury, bodily injury, and property damage caused directly by your business products and/or operation. This variety of commercial insurance is also known as “slip and fall insurance” since it covers accidental personal injuries and third-party risks on your business’s premises.
Professional Liability Insurance: This type of commercial insurance is also known as “errors and omissions” or E&O insurance. If a person files a claim against your company on the grounds of negligence, misrepresentation, or mistakes, professional commercial liability insurance will assist you with covering the costs. Medical professionals require medical malpractice insurance for claims regarding professional liability.
Product Liability Insurance: This type of insurance is designed for businesses that sell products which can potentially cause property damage or bodily injury. The insurance can help with covering the costs of victim compensation. Should your business be found liable for damage, injury, or death, it can be sued for millions of dollars. While product liability insurance isn’t legally mandated, many distributors, suppliers, and manufacturers will insist on working with a company only if they carry the necessary liability insurance.
What You Need to Consider When Choosing Small Business Insurance
Assess the needs and risks of your business: your specific industry, the amount of property you own or rent, and the number of people you employ will affect the company’s overall level of risk. A business owner needs to choose the insurance policy that will suit their needs and wants, which means keeping the company covered in case of disaster.
Choose a Coverage Limit: Small businesses need to judge their revenue and risks to determine the overall coverage options that will match their financial needs. Common claims to consider when coming up with a coverage limit are liability settlements, fire damage claims, auto accidents, and more.
Deductibles and Premiums: Your deductible refers to the amount of money you will need to pay out-of-pocket before your insurance coverage kicks in. Most small businesses choose a deductible of around $500. Larger companies will naturally opt for higher deductibles since they can afford it, and their monthly premiums will be lower.
Shop Around: When buying insurance for your small business, make sure to shop around not only for the best and most affordable prices but also for an insurance company that is both reputable and can be trusted. Remember, if something can go wrong, it likely will go wrong. When that time comes, you need to be insured.
Insurance Coverage: Homeowner's or renter's insurance often covers dog bite incidents. Settlements might be negotiated directly with the insurer, impacting the process and outcome of the case.
