There’s nothing more exciting than launching your own business for the first time. Likewise, there’s no greater buzzkill than thinking about your insurance policies right from the get go. Although nobody wants to jinx their own business by first thinking about the worst possible outcome imaginable, it’s better to be safe than sorry. Don’t look at insurance as a nuisance, but more as a form of long-term investment. Short-term, it may not look beneficial to you, but in the long run, it’ll protect your business from any potential hiccups it may encounter along the way. Failing to secure your small business can totally derail it if, God forbid, disaster strikes, thus costing you even more money to get back on track again. Therefore, here’s a guide on the ins and outs of the many different insurance policies every small business should be aware of.
There are many forms of relevant liability insurance that you can get for your small business. First off, there’s general liability, which insures you against any potential lawsuits regarding bodily injury or property damage caused to a customer by one of your employees while on the job. Apart from covering the legal costs of these lawsuit, its policies will also pay for the medical expenses of the injured party.
Similarly to general liability, there’s also product liability insurance which protects your small business from any damages dealt and harm done from possible defective products your company has sold. It is invaluable for small businesses that deal with manufacturing or retailing various goods and merchandise.
Next, professional liability insurance policies cover any involuntary mistakes made when providing services to one of your clients. Generally, you only want to be taking this out if your small business provides any kind of consultancy, marketing, and design advice or recommendation service as an example.
Finally, employment practices liability insurance helps pay for legal expenses if you are sued by your own employees or a contractor. If you have employees, then this insurance can prove beneficial to you, otherwise it’s not necessary. Its policies cover discrimination, sexual harassment, and wrongful termination.
Worker’s compensation insurance
If you’re not running a one-man business, then this insurance is a must. It provides compensation in the case that one of your employees gets injured at work. It protects your company from being sued by said employee in exchange for paying any medical expenses or wages lost due to their injury. This way, you’re insuring yourself from any potential legal issues that may arise due to workplace injuries. Also, you’re keeping your employees happy by making them feel safe and secure on the job, which is vital for any small business as you probably don’t have resources to spare like some other larger companies might have.
Logically, you want to take out this insurance if you own the property where you are conducting your business. Its policies cover damages dealt to your property in the case of fire hazards and other natural disasters or in the case your business’s furniture gets stolen. In the scenario that your headquarters get demolished and you need to construct a new building for your business, then you require a contractor bond to ensure that the public construction job is done properly. This way, if the construction project is not finished on schedule or is abandoned mid-way, your business will be paid compensation for it.
Business interruption Insurance
In connection to the previous point, business interruption policies help pay for rent or lost profit in the case your business is unable to operate due to natural disasters or similar perils. In addition, there’s also equipment breakdown coverage and commercial auto insurance which protect your small business from equipment malfunctions and possible damages dealt to your company vehicles in the event of car accidents. Such scenarios could completely stop your business in its tracks, not to mention that if you’re not insured, you’d have to pay the repair costs all by yourself, drying your coffers completely.
Data breach insurance
With the rise of cyber-crime and the increasing risk of new cyber-attacks, your company needs to safeguard its sensitive data against such threats, especially if your company has important client data on its servers. Consequently, leaks of such sensitive information could not only hurt the relationship between you and your clientele, but also put you in the legal situation where you might get sued for not adequately protecting the data in question. This is why data breach insurance is so critical in today’s world, where even big companies with state-of-the art cyber-defenses eventually get hacked. Should this occur, its policies will safeguard you from any legal liabilities, as well as provide compensation for your loss.
All in all, the type of insurance you’re looking for really depends on the type of business you’re running. If you have employees and own your business property, then insuring them is a must. If that is not the case, then you can get away without those. Likewise, if your business deals with providing certain services, then it might be a good idea to insure them as well to avoid any unwanted legal issues. Lastly, general liability and data breach insurance are essential for any small business regardless of the above factors and getting them is almost a no-brainer.