Why you need small business insurance
One of the important things a budding small business venture needs is insurance. Every small business requires the appropriate insurance coverage to help protect it from unplanned damages and mishaps. If you’re just starting your business, you may be less bothered about insuring your startup. However, no one plans for accidents or misfortunes. They are part of life and therefore we should be prepared for them. You don’t want to risk losing all your efforts to a small mishap.
What insurance coverage does my small business need?
Now that we know that every business needs to have some form of insurance covering them, let’s examine the kinds of insurance policies that are suitable and necessary for small businesses.
5 Important insurance coverage types for small businesses.
- General liability insurance
This is a type of insurance coverage that provides cover in the event that your business caused bodily injury or property damage. General liability insurance (also called commercial general liability insurance (CGL)) typically pays the associated cost of hiring a lawyer to defend your business in such situations or the cost required to protect the reputation of your business. General liability insurance includes coverage for damage to your business reputation such as slander or libel and copyright infringement. This type of insurance policy is also called business liability insurance. It pays others on behalf of your business.
- Commercial property insurance
This helps protect the physical assets of your business from theft, fire, explosions, vandalism, burst pipes and other types of damages that may occur. Such physical assets include offices, buildings used by your business (owned or leased), warehouses, business equipment, computers, machines and tools. Commercial property insurance policy will reimburse you for any damage to the items covered by the policy. This policy is also referred to as business property insurance.
- Workers compensation insurance
Accidents in the workplace can cause injuries to the workers. As a small business owner, It is your duty to ensure that your workplace is generally safe for workers. However, accidents are usually unintended, therefore the need for insurance coverage. Workers compensation insurance (also called workers comp) will cater for treatment of sick or injured workers. Workers comp also ensures that workers don’t lose wages while undergoing treatments. It protects you (the employer) from lawsuits by the injured worker.
- Business interruption insurance
This is a type of insurance policy that covers the loss of income that a business suffers after a disaster. This cover will repay lost revenue if your business is unable to open due to a disaster such as fire, flood, damaged building, etc.
- Commercial Auto Insurance
Vehicles used for your business operation may suffer accidental damage from time to time. Commercial auto insurance helps cover damages to vehicles used for business purposes. This sort of cover is not included in your personal insurance. Commercial vehicle insurance reduces financial costs that may be incurred in the event of damage to or by these vehicles and also covers for the medical treatment of the driver if there is an accident. It does not cover personal cars.
Business Owners Policy Insurance
Specially designed for small businesses, a business owner’s policy covers most of the above listed insurance policies. It is comparatively less expensive than buying separate insurance policies for this same coverage. So consider whether a BOP is right for you.
Small Business Insurance Cost
The cost various small business insurance policies vary from one provider to the other and may be affected by some of the following:
- Industry and type of business
- Number of employees
- Type of property and assets
- Location
- Revenue
- History of prior claims