Entrepreneurs are exposed to risks from the moment they start a business. A business is vulnerable even before it hires its first employee. It is important to have the right insurance. A single lawsuit or catastrophe could wipe out a small business before it has any chance of survival.
Businesses have access to many insurance types that can protect them from these risks. These are the types of insurance that every business should have.
1) Professional liability insurance.
Also known as E&O insurance, liability business insurance covers businesses against claims of negligence arising from the business’s failure to perform or mistakes. Professional liability insurance is not a one-size-fits-all policy. Every industry has its own concerns and a custom policy will be written to address them.
2) Insurance for property.
Property insurance is essential for any business that leases or owns space. This insurance covers inventory, equipment, signage and furniture in case of fire, storm, or theft. Standard property insurance policies generally do not cover mass-destruction events such as floods or earthquakes. Your insurer may be able to offer a separate policy if your area is susceptible to these types of issues.
3) Workers’ compensation insurance.
Workers’ compensation insurance should be included to any business’s policy once the first employee is hired. If an employee is hurt or dies due to his employment, this will provide coverage for medical treatment, disability, and death benefits. Even though employees may be performing low-risk jobs, slip-and fall injuries and medical conditions like carpal tunnel syndrome can result in expensive claims.
4) Home-based businesses.
Many professionals start small businesses from their homes. Homeowner’s insurance doesn’t cover home-based businesses like commercial property insurance. Ask your insurance company for additional coverage if you are operating your business from your home. This will cover your inventory and equipment in the event of an emergency.
5) Insurance for product liability.
Product liability insurance is essential for any business that manufactures products to be sold on the public market. Even businesses that take every precaution to ensure their products are safe could be sued for damages caused by one or more of their products. With coverage that is tailored to specific types of products, product liability insurance can help protect businesses in such cases.
6) Vehicle insurance
To protect companies against any liability in the event of an accident, company vehicles must be fully insured. Businesses should at the minimum insure against third-party injury. Comprehensive insurance will also cover that vehicle in case of an accident. Employees who use their personal cars for work will be covered by their personal insurance in case of an accident. This is only if employees are delivering goods and services for a fee. This applies to delivery personnel.
7) Insurance for business interruption.
A business’s operations may be disrupted if it is affected by a natural disaster or other catastrophic events. Your business may lose income because of the inability of your staff to work in the office, make products, or make sales calls during this period. This insurance is particularly useful for companies that need a physical location in order to conduct business, such retail stores. These events can result in a loss of income for a company that has business interruption insurance.
A business can avoid major financial losses due to a lawsuit, or other catastrophic events by having the right insurance. Get in touch with your insurance company to learn which types of insurance are recommended for your business type.