A business owner needs to be prepared in the event of a disaster.
When accidents, injuries, negligence, theft, or other losses occur in a professional situation,
the business and their owners can often be held liable for these losses.
What does it mean to be liable?
Liability is a legal responsibility to settle financial debts or obligations to those affected
by a loss, typically in the form of a lawsuit, which can total amounts greater than the business
is able to afford.
Business insurance exists to help pay for these liabilities.
Business Insurance doesn’t prevent disasters from happening: rather, it is a proactive
solution that protects you from liabilities once a disaster has occurred.
Insurance prevents the cost of business mistakes from leading to complete financial ruin.
This video will cover the primary types of business insurance to help you protect your
assets and your business, as well as list some of the more specialized policies available.
We will also share some agent resources to help you secure the perfect insurance policy
for your small business.
Protecting Your Company from Liability
The term,“Business insurance”, isn’t actually a specific type of insurance policy—rather,
it is a term used to describe the types of insurance coverages designed for business
owners and their companies.
The specific policies and levels of coverage required will depend on the size and type
of business you operate.
You don’t need to know all the details - a qualified agent will help determine where
your liabilities lie and recommend appropriate policies - but every business owner should
have a basic understanding of what coverages are available.
Insurance is a standard cost of doing business, and is relatively inexpensive compared to
the potential impact of a lawsuit-- considering that the cost of a single claim can decimate
a company, it’s the smart thing to do.
Let’s take a look at three of the most common forms of small business insurance:
The first is GENERAL LIABILITY INSURANCE.
General liability insurance is the most common type of business insurance, as it covers the
most basic needs that are shared among all types of companies.
Things like bodily injury on your business’s property and physical damage caused by employees
are covered by this policy.
If you aren’t sure which types of insurance your company needs, you should look here first.
Bear in mind, General Liability does not cover employee injury- which brings us to the next
common type of business insurance: WORKERS’ COMPENSATION INSURANCE.
Workers’ compensation insurance (workers, or workmans, comp for short) is meant to protect
the interests of your employees if they are injured on the job.
It can also protect your business from a lawsuit if that employee needs additional compensation
for their injuries.
If you have any employees, you’ll likely need this coverage: almost all states have
laws requiring Workers Compensation Insurance.
Thirdly, there is PROFESSIONAL LIABILITY INSURANCE.
Also known as Errors and Omissions insurance, Professional Liability Insurance is a policy
that is meant to protect professionals in the workplace.
Expert advice given to a client by you or your employees may not always lead to the
desired result.
If your guidance is deemed inaccurate, negligent, or fails to deliver agreed-upon results, it
can leave you open to liabilities if the client is financially damaged and blames your company.
Professional Liability Insurance is essential protection for providers of professional or
expert advice: Real Estate and Insurance agents, financial advisors, and other coaches and
consultants can all benefit from this type of insurance.
Aside from these foundational types of insurance coverages, there are also more specific policies
available.
They are typically specialized to match the unique needs of different businesses.
Some of these include:
Commercial auto and property insurance, which are similar to personal auto and homeowner’s
insurance, but for professional vehicles and workplaces.
These policies protect owners against damages arising from car accidents, fire, certain
natural disasters, and so on.
Business Interruption Insurance compensates your business a percentage of lost revenue
in the case of a catastrophe and business shutdown.
Product Liability Insurance covers physical or other harm to a customer that is caused
by a product that you manufacture or sell.
Home-Based Business Insurance covers gaps in your homeowner’s insurance policy if
you run a business out of your home.
And Data Breach Insurance covers some of the damages in the event that your customers’
digital data is breached or stolen.
To simplify administration and save money, you can consolidate your coverages with a
Business Owner’s Policy, also known as a BOP.
A Business Owner’s Policy is a group of insurance policies tailor-made for small businesses.
These packages typically include general liability, commercial property, and business interruption
insurance and can be customized to your business’s specific needs.
In conclusion,
Your business needs insurance.
This fairly modest investment will protect both your business and personal assets from
the inevitable liabilities that arise from mistakes and disasters.
Now that you have seen the basic types of business insurance policies, you can learn
more about each one in detail at our website.
Check out the links in the description below for over 300 business ideas with detailed
insurance breakdowns of what policies and coverage you will need.
We also provide recommended agent links to speak directly with a specialist to help you
get the best rate on the policies your business needs.
We are dedicated to providing the most useful information for small business owners, and
would love to see your feedback in the comments on what other information you need to help
follow your entrepreneurial dreams.
Visit us at HowtostartanLLC.com