According to the U.S. Small Business Administration (SBA), there are about 31.7 million small businesses as of 2020. Starting and running a small business isn’t easy – and once you’ve put your heart and soul into that precious dream, you’ll want to protect your investment. To secure your future and ensure that your doors open for a long time to come, consider these eight essential business insurance policies.
8 Essential Commercial Insurance Policies to Protect Your Business
Navigating the vast landscape of business insurance can feel overwhelming. With numerous options available, it’s essential not only to select the right policies tailored to your business’s specific needs but also to understand the coverage provided by each insurance policy. While every business faces unique risks, a combination of these eight common insurance policies outlined below can help form a solid foundation for protecting your business.
1. General Liability Insurance
This is the most important insurance coverage you should consider and a reliable starting point. Often part of a Business Owners Policy (BOP), general liability insurance protects you from legal claims arising from property damage and bodily injuries caused by your operations. It covers legal expenses, potential settlements, and medical expenses, safeguarding you from financial burdens and legal headaches. Plus, many vendors require their business partners to have liability insurance, opening doors to more business opportunities for you.
2. Product Liability Insurance
Product malfunctions happen even when strict quality control measures are implemented. In the unfortunate event that a defective product causes harm, product liability insurance becomes crucial as you may be held liable for damages. This insurance provides coverage for legal defense costs, settlements, and potential medical expenses. Consider adding product liability insurance alongside your general liability insurance, especially if you are in an industry where you manufacture and sell products.
3. Commercial Auto Insurance
Businesses frequently rely on vehicles for various purposes such as deliveries, errands, and client visits. Just like your personal car, company vehicles need dedicated protection. Commercial auto insurance covers you and your employees on the road in case of accidents involving company-owned vehicles. It includes coverage for property damage and bodily injury claims just like a personal auto insurance policy. Remember, your personal car insurance will not provide any coverage for business-related claims.
4. Commercial Property Insurance
Commercial property insurance protects any rented or owned building and equipment used to run your business. This could include your business’ inventory, office furniture, computer systems, and any machinery. While it shields against hazards like fire, theft, vandalism, and smoke damage, it’s crucial to note that coverage for earthquakes or floods requires separate policies, such as commercial flood or earthquake insurance.
5. Worker’s Compensation Insurance
Workers compensation insurance helps cover your employee’s medical expenses, lost wages, rehabilitation, and any other related costs that result from getting injured while working. Additionally, it protects your business from potential lawsuits and legal claims initiated by injured employees. Without this insurance, you will be responsible for paying the total cost of an employee’s medical expenses, which can cause financial harm to you and your business. Additionally, most states require businesses with employees to carry workers’ compensation insurance. You can face fines, penalties, and criminal charges if you don’t comply with your state’s law.
6. Errors and Omissions Insurance
Also known as professional liability insurance, this coverage is vital for businesses providing professional services. In certain industries, such as law, medicine, consulting, real estate, financial services, or beauty services, this insurance can protect you if you are sued for malpractice, even if you weren’t negligent. This coverage can also safeguard you against claims like breach of contract, negligence, or misrepresentation.
7. Cyber Liability Insurance
In today’s digital age, small businesses face significant risks from cyber threats and attacks. Cyber liability insurance helps protect your business from the financial losses and legal liabilities associated with data breaches, cyberattacks, and privacy violations. It covers expenses such as data recovery, legal fees, notification costs, and potential fines or penalties. With the increasing frequency and sophistication of cyber threats, this insurance has become necessary for businesses of all sizes.
8. Commercial Umbrella Insurance
Think of commercial umbrella insurance as an extra layer of protection beyond your primary business insurance policies. It kicks in when a claim exceeds the limits of those policies, providing invaluable support against lawsuits or unforeseen scenarios. This is particularly relevant for high-risk industries or businesses facing potential legal exposure.
Get your Business Insurance Evaluated by AIS Insurance
Building your entrepreneurial dream is a thrilling adventure, but it can come with hidden risks that can threaten your success. Secure your business with the right insurance. Speak with one of our Commercial Insurance Specialists today at (855) 919-4247 for a quick and easy free quote. Our knowledgeable commercial insurance team is committed to assisting you in comparing insurance quotes and finding the right protection for your business.
The information in this article is obtained from various sources and offered for educational purposes only. Furthermore, it should not replace the advice of a qualified professional. The definitions, terms, and coverage in a given policy may differ from those suggested here. No warranty or appropriateness for a specific purpose is expressed or implied.
