A Safety Net for Your Business: Understanding Your Insurance Options
All companies need business insurance regardless of their size, industry, or market. The right coverage can protect your organization from losses (from fires, storm damage, etc.) and the financial repercussions of business liability.
So, carrying business insurance isn’t just a good idea—it’s critically important. If you fail to maintain adequate protection, you can incur a large financial burden that you must pay out of your company’s revenues or savings. Sadly, many businesses every year close their doors permanently due to unexpected incidents for which they didn’t have business insurance.
The good news is that getting policies is easier than ever. Advances in technology are making coverage more accessible and more affordable.
Small Business Insurance: Buying Only What You Need
Business insurance providers offer various policies to meet different requirements. That’s good for customers, as it means you can purchase just the coverage you need rather than a large, comprehensive policy with protection that doesn’t apply to you. And each policy has its own Certificate of Insurance (COI), which you may need to show to landlords, business partners, or companies that hire your business.
Seven of the most common small business insurance policies are:
- Workers’ compensation insurance. Often shortened to workers’ comp, this policy protects employees financially if they suffer an injury or contract an illness while working. It can also provide a death benefit to the person’s family in the event of a work-related fatality.
- General liability insurance. This coverage pays for damages and legal expenses associated with injuries to non-employees, damage to other people’s property, and more.
- Business owners policy (BOP). Also called property & liability insurance, this type of insurance provides general liability protection plus coverage for the building you own or space you lease and any property needed to run your business.
- Errors and omissions (E&O) insurance. Also called professional liability insurance, this coverage can protect you if a client sues your business over alleged mistakes in the professional advice or service you provide.
- Commercial auto insurance. If your company owns or leases vehicles for business purposes, your state likely requires you to have this type of insurance. It protects your company from liability lawsuits from third parties related to the operation of your vehicles and also covers damage to them.
- Cyber insurance. Imagine someone steals sensitive information from you and uses it to commit fraud or is likely to. This type of insurance, often purchased as an add-on to another policy, can cover costs related to the incident (notifying customers, researching the breach, etc.).
- Umbrella insurance. Like most insurance policies, liability policies have a maximum amount they’ll pay for a covered incident. If you’re found liable in court, and the amount you owe exceeds your liability policy limit, an umbrella policy can pay the difference up to its limit.
Assessing Your Business Insurance Needs
Getting the right insurance coverage for your business is simple. First, you need to find a trustworthy insurance provider that makes it easy to get coverage. That means a company meeting several critical criteria, including:
- It has significant insurance industry experience.
- It has deep financial resources for paying claims.
- It has an excellent credit rating.
- It makes your life easier by enabling you to get quotes, buy policies, report claims, and manage your policies online whenever convenient.
- It has licensed insurance experts who can assist you.
Once you’ve found the insurance company best able to meet your needs, you should research its insurance products on its website. The information there can explain what the different policies cover, what types of businesses they’re appropriate for, etc.
Still, you shouldn’t hesitate to talk with a company representative if you have any questions.
What Does Business Insurance Cost?
Many business owners are surprised to learn how affordable small business insurance policies are. Many factors affect your insurance cost, including your company’s size, claims history, and others. However, you may be able to get hundreds of thousands of dollars in coverage (or more) for under $1,000 annually.
Get Financial Protection So You Can Focus on Running Your Business
You should take your time and thoroughly research the insurance providers you’re considering. However, once you make your decision, you should purchase coverage promptly for two reasons. First, you never know when an incident will occur. You might not be sued or suffer a loss for many years, or you might be contacted by a lawyer tomorrow.
And just as importantly, having solid insurance coverage in place can be a huge relief that lets you sleep better at night and stay focused on running your business during the day.