Insurance helps protect your business from different risks, such as sick employees, injured clients, and security breaches. However, some business owners will opt out of insurance because they’re often expensive. But without insurance, you could lose more than money.
7 Types of Insurance You’ll Need to Protect Your Small Business
If you’ve been running a business for a while, you may already have a Business Owner’s Policy, which comes with essential coverage.
If you don’t, consider purchasing the following insurance.
1. Key Person Insurance for Important/Vital Employees
Have you ever thought about what would happen to your business if you lost an essential employee or a small percentage of your staff? Person-specific life insurance, such as Key Person insurance, can cover a startup owner or high-ranking executive if they die or become severely injured.
A Key Person insurance payout can help your business stay stable during the transition, or it can be used to give your employees great severance packages if you decide to close.
2. Commercial Property Insurance for Rented Buildings
Commercial property insurance protects your rented or owned office building and the needed business equipment stored inside it. Your business equipment may also be covered by a manufacturer warranty depending on its use, but this insurance can offer you a payout.
Keep in mind that most commercial property insurance doesn’t cover weather-based damages from floods, earthquakes, or fires. You’ll need additional insurance to get full coverage.
3. Business Income Insurance for Budding Startups
Business income insurance, also known as business interruption insurance, can cover some or most of your business income if you can’t operate because of a covered instance. If you work out of a commercial building, this covers more than your commercial property insurance.
But if you have a remote job, business income insurance is an add-on to your home insurance. Either way, you’ll be covered against fire, theft, wind, and other weather/damage perils.
4. General Liability Insurance for Public Businesses
Next to car accidents, slips and falls are among the top three reasons people file personal injury cases. That’s why it’s essential for all public businesses to get general liability insurance, even if you’re just managing a few clients. One lawsuit could severely impact your financial future.
General liability insurance can protect your business from certain personal injury claims, such as bodily injury to someone else, personal injury (slander or libel), or property damage.
5. Professional Liability Insurance for Some Professionals
If you provide services that could afford you a negligence claim, like financial or legal services, professional liability insurance can protect you and your business. While liability insurance doesn’t clear you of all fault (and it shouldn’t), it does ward off most negligence claims.
Medical malpractice insurance is a common example of this type of insurance. This insurance would pay for a doctor’s legal fees if the defendant decides to take a lawsuit to court.
6. Workers’ Compensation Insurance for Employees
Workers’ compensation insurance is an important employee-specific benefit that alleviates some of the financial stress of an injured or sick worker. These benefits can help pay for medical bills, replace lost wages, pay for ongoing care, or cover funeral costs if an employee loses their life.
While most states require worker’s compensation, others leave the decision up to the employer. However, it’s a good idea to protect your employees when they’re unable to come to work.
7. Data Breach Insurance for All Online Companies
Businesses continue to lose money and the respect of their customers due to consistent data breaches and cybersecurity threats. However, data breach insurance or cyber insurance can help your company respond to a data breach if your customer’s data is lost or stolen.
Data breach insurance can help cover cybersecurity costs that relate to notifying the impacted parties, ordering new theft monitoring services, and initiating a positive PR campaign.
