13 Essential Types Of Insurance For Small Business Owners


General Liability Insurance

All businesses, even those that are home-based must have liability insurance. This type of insurance policy provides both protection and damages in case you, your workers or the products or services that you offer are purported to have caused property damage or bodily harm to a third party.

Property Insurance

In case you are the owner of a building or business property such as computers, office equipment, tools or inventory, you should think about buying a policy that provides protection against theft, fires, smoke damage, vandalism and so on. You might also wish to include loss of earnings or business interruption as part of the policy in order to protect your earnings in the event that the business is not able to operate.

Business owner’s policy (or BOP)

This type of insurance policy combines all the required coverage needed by a business owner. Generally, a Business Owner’s Policy will include property insurance, liability insurance, business interruption insurance, crime insurance and vehicle coverage. Depending on the particular needs of your company, you can modify what is covered by a BOP. Normally, business owners save money by opting for BOPs since the bundled services are generally cheaper than the combined costs of individual insurance covers.

Commercial Auto Insurance

This type of insurance coverage provides protection for the vehicles operated by a company. Commercial auto insurance cover insures your business’s cars, vans and trucks against collisions and damages. If your company does not have business vehicles and your staff drive their own cars while on official business, you need to take out a non-owned auto liability cover. This will provide protection for your company in the event that the employee concerned has no insurance or their insurance cover is insufficient .Usually, non-owned liability cover can be included in the BOP insurance policy.

Worker’s Compensation

Worker’s compensation offers insurance coverage to those employees who get injured while performing their duties. This kind of insurance provides medical benefits and wage replacement to workers who get injured as they are working. Because of getting these benefits, the worker, in return, surrenders the right to sue his or her employer for the injury. The employer is spared the possibility of incurring costs arising from huge negligence lawsuits. Generally, all parties, even taxpayers, gain from this type of insurance because they avoid the legal fees required to process a trial. If an employee dies as a result of their work, workers’ compensation insurance pays their dependents or family members.

It is extremely important for business owners to get workers compensation insurance since it offers them and the company protection against legal complications. There are different state laws, but all will require that you take out worker’s compensation insurance coverage if you have W2 workers. There are very stiff penalties for non-compliance.

Professional Liability Insurance

Professional Liability Insurance is also called Errors and Omissions Insurance. This insurance coverage provides protection against claims made by clients for negligent actions or for providing improper or inadequate professional services. A business’s general liability policy does not offer such protection and it is important to know the difference. Professional Liability Insurance coverage is suitable for any type of professional firm including consultants, real estate agents, hair salons, accountants, technology services providers, notaries, lawyers and insurance agencies.

Directors and Officers Insurance

This category of insurance provides protection to the officers and directors of a company against any actions that may impact on the operations and profitability of the business entity. In case a company officer or director is sued as they perform their official duties, the insurance policy will cover any costs or damages arising from the lawsuit.

Data Breach insurance

Where a business stores private and sensitive information about its customers or employees in paper files or on their computers and servers, it has a responsibility to protect that information. In case a breach occurs, whether it is from the paper files or electronically, a data breach policy offers protection against any potential losses or damages.

Homeowner’s Insurance

Homeowner’s Insurance is one of the most critical types of insurance cover for business owners. The policy protects against any potential damage to your home and any items contained inside. Furthermore this kind of insurance may guard you against any accidents that can occur at home or happen as a result of your actions.

Renter’s Insurance

Renter’s insurance is a sub-category of homeowner’s insurance and it is applicable only to business owners who have rented their home. The policy provides protection against any damage to the property itself, its contents and personal injuries that may occur within the home.

A renter’s insurance policy guards against losses arising from liability claims that occur on the premises but are not as a result of a structural issue with the property(in such a case, the owner’s policy would apply).

Life Insurance

Life insurance offers an individual protection against death. When you take out life insurance, the insurer undertakes to pay a set sum of money to a designated beneficiary when you die. The premium you pay is in exchange for the benefits that will be paid to the beneficiary. This coverage is crucial since it provides the business owner with peace of mind. Taking out life insurance gives you comfort that your family will not find themselves financially burdened once you die.

Personal Automobile Insurance

Auto insurance is another very critical type of insurance coverage. It covers all categories of road vehicles, from cars to trucks and motorcycles. The insurance has two functions: it protects against bodily injury and physical damage that may result from a crash and also covers any claims that may arise from the collision.

Personal Umbrella Insurance

You may wish to take out some extra insurance coverage in addition to the ones you have. A Personal Umbrella Insurance cover is an extension of an existing policy that provides coverage beyond the standard policy. The policy can cover various types of claims including auto or homeowner’s insurance. Usually, it is sold in $1 million increments, and it is used to provide coverage when the liability limits of other insurance covers have been exceeded.

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