What Kind of Business Insurance Your Small Business Needs

When launching any business, one of the most important responsibilities that a business owner has is to protect the profitability of the company. A couple of ways that this can be done is through the proficiency in which the business is managed and effectively managing the spending. However, one of the most underrated methods for protecting the financial viability of a small business is properly insuring it. The first step is determining the right types of insurance needed for small business operations.

There are multitudinous types of business insurance that are designed to help business owners properly protect their investment. While most businesses will not need every type of insurance available, there are certain types of insurance necessary for small business entities. Following are six types of business insurance that every small business should at least consider when insuring their company.

1. General Liability Insurance

Every business should have a reasonable amount of general liability coverage. This type of insurance coverage is meant to cover the business in the case someone files a claim or files a lawsuit against the company. Some things that this type of coverage will cover include bodily injury, property damage, personal injury, false advertisement and slander, to name a few.

While some businesses choose to work with an independent agent, a rising number of small businesses are choosing to work with online insurance brokerage firms to help them find complete insurance packages. This is done to minimize the business insurance cost for their company.

2. Product Liability Insurance

When a company manufactures, distributes or sells any type of product, they can be held liable for the safety of that product. Product liability insurance covers claims and lawsuits associated with product malfunction and injury due to a product malfunction. While it may be difficult to see how some products can possibly cause an injury, it is still paramount to get the coverage.

Speaking with an insurance broker may provide better insight into just how much coverage is needed. While big insurance brokers will have greater access to different insurance products, a small business owner may be more inclined to go with a smaller firm simply for the level of personal engagement.

3. Professional Liability Insurance

Much in the same way that product liability covers damages associated with a defective product, professional liability insurance is designed to provide financial protection for those businesses that are service based. This type of insurance will provide protection against malpractice claims, claims of negligence in the manner in which services were provided and more. In most states, certain professionals, such as doctors, are required to carry professional liability insurance.

4. Property Insurance

Property insurance is primarily for businesses that operate in a standard commercial building. This type of policy is designed to cover the loss or damage to property due to wind, smoke, fire, theft, vandalism, hail, and other covered events. For the sake of coverage, company property is generally defined as documents, equipment, lost income, business interruptions, buildings, and money.

If the business owner is operating their business out of their home, they can usually purchase property insurance in addition to their homeowner's insurance. In fact, there are cases in which specific riders can be added to the traditional coverage expressed in the homeowner's policy. Adding a rider can sometimes help to reduce the average cost of business insurance, helping to protect profitability.

5. Workman's Compensation Insurance

If a business actually has hired employees to carry out different tasks, with the exception of immediate family, most states will require that they purchase workman's compensation insurance. Workman's compensation insurance is designed to cover an employee who is injured while on the job — covering loss of wages and medical expenses. If an employee suffers a permanent injury, it is possible that workman's compensation can provide benefits up until the age of retirement, supplementing any disability income the person might receive.

6. Commercial Auto Insurance

If a business uses a vehicle during the normal course of business, it is important to have commercial auto insurance. Not only does this type of policy cover property damage and injury, but also the loss of use.

It is also a good idea for a business to get what is known as an umbrella policy, which is a catchall insurance policy designed to cover anything that could slip through the cracks. The good thing about umbrella policies is that they are relatively inexpensive; however, they normally require that the business owner purchases the maximum coverage and limits on all other policies.

When determining what kind of insurance a small business needs, it is a good idea to work with a professional who has the experience necessary to marry the business owner with the insurance coverage that will be ideal for them.

This article was written by Tully with the help of Consolidated Insurance Brokers, a group of big insurance brokers with 5 offices across Queensland. Tully is currently learning about business security, using the internet. Find him on Twitter.

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