Small businesses face a variety of risks, ranging from natural disasters to cyberattacks. Different types of insurance can help protect your business from various adverse — and often costly — circumstances. Here are a few of the insurance options available to help protect your small business.
General liability insurance
General liability insurance, also known as business liability insurance, offers protection against claims of bodily injury and property damage, as well as the medical expenses associated with these events. If a person incurs an injury or property damage while visiting your business, general liability insurance can cover the cost of their medical bills or damages if your business is found to be responsible.
General liability insurance can also protect against financial losses that result from slander or copyright infringement. This type of insurance is appropriate for any small business and is often required by property owners, lending agencies, and licensing boards.
Professional liability insurance
Professional liability insurance, sometimes called errors and omissions insurance, is appropriate for any business that provides professional services or offers advice to clients. This includes accountants, real estate agents, and advertising agencies. Professional liability insurance provides coverage in instances where a customer makes a claim against your business for misrepresentation, malpractice, or negligence.
This type of insurance can cover the costs of legal representation, settlements, and judgments. Without it, your small business may be financially responsible for reimbursing customers or paying expensive legal fees.
[Read more: Everything You Need to Know About Professional Liability Insurance]
Commercial property insurance
This type of insurance provides protection for your business’s physical assets, such as its physical location, equipment, furniture, tools, business records, and electronics. Coverage generally also extends to outdoor items like signs and fences.
Commercial property insurance provides coverage for damages that may occur due to natural events, such as fires and storms. This type of policy may also cover damage caused by vandalism or acts of civil disobedience.
As you expand your business operations with new equipment or increased space, your needs for insurance coverage may change.
Commercial auto insurance
If your business uses vans, trucks, or cars, you will likely need commercial auto insurance to provide coverage for these vehicles. Personal auto insurance policies generally do not cover business-related vehicle use, so it is generally necessary to have commercial auto insurance for your business’s vehicles.
If you or your employees use personal vehicles for business purposes, then hired and non-owned automobile liability insurance can provide protection if you or your employees are responsible for an accident while using personal vehicles for business.
[Read more: Have Company Vehicles? This Is What You Need to Know About Commercial Auto Insurance]
Workers’ compensation insurance
This type of insurance is required by the federal government if your business has even a single employee. Workers’ comp covers your employees in cases of work-related injuries or illnesses, including the costs of their medical expenses, disability benefits, and lost wages.
Cyber liability insurance
Data breaches and cyberattacks can be expensive for small businesses and cyber liability insurance can help cover some of the costs associated with these events. This type of insurance can cover some of the costs of notifying customers in the event of a data breach and may even offer free credit monitoring to impacted customers. If a customer decides to file a claim against your business due to a leak of their personal information, this insurance may help cover those costs as well.
[Read more: Does Your Small Business Need Cyber Insurance?]
Tips for choosing business insurance
Before selecting a business insurance provider, take the following steps:
- Evaluate your business-specific risks. Carefully consider the risks your small businesses may face, including natural disasters, accidents, or potential lawsuits. In many cases, these will depend on the nature of your small business.
- Cover your legal bases. Determine what types of insurance are legally required for your business. The federal government and individual states may have separate requirements, and business owners may have different needs based on whether they rent or own their physical workspace.
- Work with a licensed agent. When you’re considering a commercial insurance agency, be sure to read reviews as well as their website to see if the agency’s focus is in line with the needs of your business.
- Compare policies to find the best fit. Insurance policies often vary dramatically when it comes to cost and the benefits they provide. When you’re shopping, contact several agents to compare rates and deductibles. Read policies thoroughly to understand what each option does or does not cover.
- Regularly reassess your needs. As you expand your business operations with new equipment or increased space, your needs for insurance coverage may change. Plan for annual check-ins with your insurance agent to discuss any recent changes or growth in your business and how they may impact your insurance needs.
CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.
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