Every business needs some kind of insurance to protect the business owner—and its customers—from a variety of potential risks. Even a small start-up needs to carefully assess the risks inherent in doing business to be sure that the right coverage is in place.
Insurance policies are available for most risks your business might face. Some businesses might need a full portfolio of policies that cover a wide range of property and liability concerns, while others might need a single, bundled business owner’s policy that covers all the bases.
Here are the most basic types of business insurance policies that every business owner should consider.
Commercial general liability insurance: Every business needs to have some form of liability insurance to cover the cost of your defense and damages if you, your products, services or employees cause bodily injury or property damage to someone else. Commercial general liability policies cover the legal costs and judgments associated with accidents, injuries and claims of negligence. It also can provide coverage for claims of slander and libel if you decide to have these.
Commercial property insurance: If you own a business or business property (office equipment, computers, inventory, tools, etc.), you need commercial property insurance. It provides coverage for expenses related to the loss of business property due to events like smoke, fire, wind, hailstorms, civil disobedience, vandalism and certain other perils. It can be expanded to include business interruption coverage, which protects your earnings if you are unable to operate for a period of time due to a covered loss.
Business owner’s policy (BOP): A BOP bundles together all of the protections that a typical small business owner would need, including liability insurance, property insurance and business interruption insurance. BOPs can be customized to meet the needs if the individual business, with certain coverage areas added or removed as needed. A BOP is a more economical way for small business owners to purchase comprehensive coverage, as the bundled policy will cost less than purchasing several separate business insurance policies.
Commercial auto insurance: If your company owns cars, SUVs, trucks or vans that transport employees, products or equipment, you need commercial auto insurance. It protects you from the costs associated with collisions or other vehicle damage, and it also provides liability protection if your business vehicles are involved in an accident. You might need a non-owned auto liability policy if your employees drive personal vehicles for business use.
Workers’ compensation insurance: Most states require workers’ compensation insurance for any business that has employees. It provides income replacement and medical coverage for workers who are injured on the job. Workers compensation requirements vary by state, but in general, it is extremely important for any business owner that has employees. It protects you from potential lawsuits related to workplace injuries and illnesses, and it protects employees from financial devastation if they are injured at work. Penalties for non-compliance with workers’ compensation laws can be severe.
Product liability insurance: Manufacturers, wholesalers, distributors and retailers may be held liable if the product they produce or sell causes injury or harm. Product liability insurance protects your business in these instances. Your need for this coverage is dependent upon the type of business you have or the product(s) that you sell.
Professional liability insurance: This coverage, also known as errors and omissions insurance, provides for your legal defense and any damages from claims of malpractice, negligence or errors in the provision of professional services. Professional liability coverage is typically recommended for lawyers, accountants, engineers, IT consultants, real estate agents, or any firm that provides professional services to customers.
If your new business is a home-based business, be mindful that your homeowners insurance policy may not provide adequate coverage for your home-based business. You may need to add riders to your homeowners policy, or you may need to purchase additional policies such as professional liability.
Every business is different. We can help you assess the risks your business will face and we can advise you on the best policies to protect you. Contact us, Evans Ewan & Brady Insurance Agency at 512-869-1511 or firstname.lastname@example.org today to learn more. You can also visit us on the web at www.eebins.com.