Business insurance protects small and mid-size enterprises (SMEs) from inevitable business risks. It’s designed to protect a company’s financial assets and intellectual and physical properties from theft, vandalism, property damage, employee injuries and illnesses, loss of income, and lawsuits.
There are several kinds of business insurance coverage for different kinds of business risks. Choosing the right one for your company can be tricky, but we’ve got you covered. Here are different kinds of business insurance that your small business might need.
1. General Liability Insurance
Almost every company needs general or business liability insurance. It protects business owners and their companies from “general” claims.
It mainly covers damage costs, medical expenses, or attorney fees involving bodily injuries and property damage caused by your company’s products, services, or operations. However, its coverage doesn’t include costs from auto accidents, professional mistakes, and employee injuries.
2. Commercial Property Insurance
Whether you’re the building owner, tenant, or work from home, getting commercial property insurance is a must. It protects your business’s physical assets from various perils, such as fire, theft, and natural disasters. It covers your company’s building and all its content, including important documents, inventory, furniture and equipment, fence and landscaping, and exterior signs.
3. Business Interruption Insurance
Should your business be forced to move, rebuild, or close temporarily due to a disaster, business interruption insurance can help your business stay afloat. It helps you pay utilities, mortgage or rent, and taxes, reimburses lost net income and covers payroll and relocation fees. However, it isn’t stand-alone insurance. It’s often sold in conjunction with your commercial property insurance.
4. Business Owner Policy
A business owner’s policy (BOP) is an enhanced insurance package that bundles basic insurance coverages at a premium. It typically combines general liability, commercial property, and business interruption coverages.
The advantageous part is that it can be customized to fit industry-specific businesses. Hence, if your company has unique needs, you can add optional coverages, such as data breaches and off-premises utility services’ business income.
5. Unemployment Insurance
Unemployment benefits or unemployment insurance is a type of state-provided insurance. While you don’t have to purchase it as a business owner, know that it’s fuelled by the taxes you pay at both the state and federal levels.
This cash benefit provides wage security for employees who recently became unemployed due to a situation beyond their control or through no fault of their own. Every worker qualifies for it unless you’re fired, left voluntarily, considered an independent contractor, and elected not to work.
6. Workers’ Compensation Insurance
Since liability insurance doesn’t cover employee injuries and illnesses, they’ll be covered under the workers’ compensation insurance or workers comp. It’s effectively a state-mandated disability insurance program for workers who got injured or sick “in the course and scope” of their job.
This insurance provides them with medical expenses, lost wages, and rehabilitation costs, as well as death benefits to the family of the workers who died on the job.
7. Disability Insurance
Unlike workers comp, disability insurance provides income replacement and job protection. Employers offer this, especially if they get seriously sick or injured and can’t work for extended periods. It can be a short-term disability (covers 40-70% of lost wages within a year) and a long-term disability (covers 60-80% of lost wages for 2-10 years).
8. Professional Indemnity insurance
Clients can sue your company if there’s a mistake in the products and professional services given to them by your company that caused them financial losses.
Fortunately, professional indemnity insurance can protect you against different clients’ claims. It covers claims arising from negligence, misrepresentation, inaccurate advice, malpractice, or personal injuries, such as libel or slander.
9. Cyber Insurance
If your company keeps sensitive customer information, it’s recommended to have cyber insurance. It covers your company’s liability, including legal fees and expenses, for Internet-based risks, such as malware, cyber-attacks, and data breach. It also notifies clients about a data breach, restores the personal identities of affected customers, recovers compromised data, and repairs damaged computer systems.
10. Home-based Business Insurance
Home-based business owners usually rely on their personal life insurance. They need to secure it since they’re self-employed—nobody can help them but themselves. If you’re one of them but not yet insured, you can check and compare life insurance quotes at Assurance.com.
Moreover, since they usually work remotely from their homes, they often depend on homeowners’ insurance policies to protect their home-based businesses. The problem is homeowners insurance doesn’t cover other businesses’ properties, such as technology, files, and professional equipment. This is where home-based business insurance comes in.
Home-based business insurance covers your company’s equipment and inventory on or off-premise. It also comes with business interruption insurance and additional liability for employees, delivery personnel, and clients. However, it’s only recommended for one to two-person home-based companies. If yours is larger, standard business insurance is advised.
SMEs face numerous business risks that hold them financially and legally liable. These include financial, operational, compliance, cybersecurity, and reputational risks. Fortunately, you can navigate and mitigate these risks well with the help of different business insurance policies. When your business is insured, you can easily enforce your strategic plans, achieve your business goals, and ensure your company’s survival in the years to come.