I was recently chatting with a business associate who is experienced in the insurance industry. He indicated that quite often business owners are not well informed of the types of insurances that they should be considering for their business.
Right from the start, a business is at risk. Business owners have access to many types of insurance which should be considered for their business.
Every business, even if home-based, needs to have liability insurance. The policy provides both defense and damages if you, your employees or your products or services cause or are alleged to have caused Bodily Injury or Property Damage to a third party.
Many professionals begin their small businesses in their own homes. However, homeowner’s policies don’t cover home-based businesses in the way commercial property insurance does. If you’re operating your business out of your home, also consider insurance that covers your equipment and inventory, if applicable.
Professional liability insurance, also known as errors and omissions (E&O) insurance, provides defense and damages for failure to or improperly rendering professional services. Each industry has its own set of concerns that will be addressed in a customized policy written for a service business.
Whether a business owns/leases its space or has business personal property, insurance needs to be considered. This insurance covers equipment, tools, signage, inventory and furniture in the event of a fire, storm, theft or vandalism.
Once your first employee has been hired, workers’ compensation insurance must betaken out by a business. This type of insurance provides wage replacement and medical benefits to those employees who may be injured while working for your business. State laws will vary, but all require you to have workers compensation if you have W-2 employees. Disability insurance should also be put into place. There can be stiff penalties for non-compliance.
If your business manufactures products for sale to the general market, product liability insurance is a must. Even a business that takes every measure possible to make sure its products are safe can find itself named in a lawsuit due to injury or damage caused by one of its products. Product liability insurance works to protect a business in such a case, with coverage available to be tailored specifically to specific type of products.
If company vehicles will be used, you can protect those vehicles that carry employees, products or equipment with commercial auto insurance. If employees are using their own cars for business, they will need to verify that their own personal insurance will cover them in the event of an accident. One major exception to this is if they are delivering goods or services for a fee. This includes delivery personnel.
This type of insurance indemnifies the directors and officers of a company against losses as a result of legal action brought against them for alleged wrongful acts in their capacity as directors and officers
If the business stores sensitive or non-public information about employees or clients on their computers, servers or in paper files they are responsible for protecting that information. If a breach occurs either electronically or from a paper file a Data Breach policy will provide protection against the loss.
If a disaster or catastrophic event does occur, a business’s operations will likely be interrupted. During this time, your business will suffer from lost income due to your staff’s inability to work in the office, manufacture products or make sales calls. This type of insurance is especially applicable to companies that require a physical location to do business, such as retail stores or manufacturing facilities. Business interruption insurance compensates a business for its lost income during these times of business interuption.
These are just some of the many types of insurance that business owners should consider having and insurance coverage should be reviewed at least annually.