One of the first steps to launching a business is making sure you have adequate coverage. Whether you’re providing a service or selling goods, you are accepting a measure of liability. What type of insurance does your business need? That’s going to depend on the nature of your business. Let’s get into the basics.
1. General Liability Insurance
Most businesses are going to need general liability insurance.
This protects you against common risks like property damage, bodily injury, and advertising injury claims. If someone slips and falls in your storefront, general liability is what would cover the expenses that ensue. This policy protects your business against lawsuits and helps cover legal fees, settlements, and medical expenses resulting from covered incidents.
2. Property Insurance
If you’re operating a work-from-home business, you can probably skip this one.
Property insurance protects your business assets, like buildings, equipment, and inventory, against things like fire, theft, vandalism, and natural disasters. Even if you lease your business’s location, having property insurance is essential.
3. Professional Liability Insurance (Errors & Omissions Insurance)
If you’re operating a service-based business, you’re going to need this one.
Anyone offering a service, expertise, or advice should have Errors & Omissions (E&O) insurance. If you’re a marketing consultant and a client sues you for failing to deliver results as promised, E&O insurance would cover your legal expenses and any settlements resulting from the lawsuit.
E&O insurance protects you against any claims of negligence or errors that result in a financial loss for your client. This is particularly important for consultants, contractors, and other professionals whose work directly impacts their clients.
4. Workers’ Compensation Insurance
Workers’ compensation insurance is mandatory in most states for businesses with employees.
It provides coverage for medical expenses, lost wages, and rehabilitation costs for employees with a work-related injury or illness. Workplace accidents can be costly. This type of coverage protects you from the months of financial consequences that can come about from a team member’s injury.
5. Commercial Auto Insurance
If your business owns vehicles for work purposes, this type of insurance is essential.
This policy provides coverage for vehicles used in your business operations, including cars, trucks, vans, and specialty vehicles. Commercial auto insurance typically includes liability coverage, collision coverage, comprehensive coverage, and uninsured/underinsured motorist coverage.
6. Cyber Liability Insurance
Businesses that store sensitive customer data & process online transactions need this type of insurance.
The more digitized our society becomes, the more relevant cyber liability insurance becomes. If your online retail store experiences a data breach, resulting in the theft of customer credit card information, cyber liability insurance would cover the costs of notifying affected customers, providing credit monitoring services, restoring compromised data, and defending against potential lawsuits. The reaches of a data breach are far and wide. This type of insurance protects from the financial damage caused by those kinds of incidents.
Businesses like e-commerce companies, healthcare providers, financial institutions, and technology firms, typically need cyber liability insurance.
7. Business Interruption Insurance
Business interruption insurance provides coverage for lost income and ongoing expenses if your business is forced to close temporarily due to a covered peril, such as a fire or natural disaster. This coverage helps businesses weather the financial impact of unexpected disruptions by compensating for the income they would have earned during the closure.
Finding the Right Business Insurance for You
These are some of the most common types of business insurance out there. But the risks your business will face strongly depends on your industry and unique circumstances. Every situation is going to be different.
Talk to an independent insurance agency to find the right coverage for you, at the right cost.