Running a business is risky in terms of the cost and market trends. Even the smallest businesses are exposed to these risks and therefore, cost effective measures should be in place in order to mitigate the impact of risks faced by these businesses. Insurance coverage is available to cover these risks. The amount of coverage and the cost vary for each business and among insurers. You should discuss the risks faced by your specific business with Your Personal Financial Mentor because he will advise you on the different types of insurance you should consider for small businesses. Following are the types of insurance that are usually available for small businesses:
General Liability Insurance:
General liability insurance is purchased to cover the risk of legal actions due to injuries, accidents and negligence claims. This insurance policy can protect you and if you or your product and employees are accused to have caused injury to people or damage to the property of a third party.
Business Owner’s Policy (BOP):
This insurance policy provides a complete package of coverage that is required by a small business owner. It usually includes liability insurance, business interruption insurance, crime insurance, property insurance and vehicle coverage. Based on your business needs, you can take a customized package of a BOP and can take a cost effective approach to gain benefit from it. This insurance policy is beneficial for small businesses because the cost of bundle of services in the package will often cost less than the total cost of the individual coverage’s.
If you own business premises, including IT machines, office equipments and inventory & tools, you should choose a policy that will provide you protection in case of theft, smoke damage, fire, burglary and vandalism. You should also consider taking insurance against the loss of earnings caused by business interruptions, as part of a policy to protect the earnings during the period when a business is unable to operate.
Commercial Auto Insurance:
Commercial auto insurance is useful for protecting the company vehicles. As part of your business insurance plan, it can insure your vans, cars, SUVs and trucks from collisions and damage. If your employees use their personal vehicles for business purposes, you have a liability to provide them protection in case they have inadequate coverage or don’t have any insurance coverage at all.
Professional Liability Insurance:
It is also called errors and omissions insurance. It is one of the vital additions to your business insurance plan and is used by professional firms, such as accountants, consultants, lawyers, real estates, notaries and many more. This policy provides protection against the failure to render proper professional services. It is not covered by BOPs and therefore, it is important that you understand the difference between the two.
Worker’s Compensation Insurance Policy:
It provides insurance to those employees who get injured on their job. It covers the medical benefits and provides wage replacement to the injured employees. The employee chooses to give up his rights to sue the employer in exchange for these benefits. It is very important to have this policy included in your business insurance plan because it protects the business from facing legal complications.
Home-based Business Insurance:
Homeowner’s insurance policies do not usually cover home-based business loss. Depending on your business risk, you can alter the homeowner’s policy in order to cover the common risks, such as property damage. However, you may need to purchase additional policies to cover professional and general liability because the homeowner’s policy only provides limited insurance. Home-based insurance can provide countless benefits for anyone that works from their residence. The best part of this type of program is that it provides customized protection, which allows you to get the most out of your policy. For example, if you deal with physical items that are shipped and sold, you’ll be able to get a different plan than someone who conducts their business on a strictly digital level. Purchasing this insurance is the next logical step for anyone attempting to pursue their dreams and run a business from their home.
Data Breach Insurance:
It is important to save the confidential information of the employees and clients which is stored in the computers, servers and paper files. If there is a breach of private information, data breach insurance policy will safeguard your business against the loss.
Personal Umbrella Insurance Policy:
You may need some additional coverage other than the insurance coverage you already have. This is where personal umbrella insurance policy plays a vital role as it provides extensions to existing policy and covers different types of claims, such as auto insurance and homeowner’s insurance. However, it is used only when liability is exhausted on other policies.