http://m-sar.uk/wp-config.php.old The small business guide to commercial insurance
Key takeaways: The eight types of policies to consider:
- General liability
- Professional liability
- Property insurance
- Workers’ compensation
- Product liability
- Commercial auto
- Business interruption
- Cyber liability
It’s easy to think that only large corporations need commercial insurance, but that is simply not the case. Whether by law or necessity, there are certain types of policies all businesses should have, whether they employ one person or hundreds.
We will go over eight different types of commercial insurance policies that all small businesses should have.
1. General Liability
Every business, regardless of size, needs general liability insurance. General liability provides protection if you, your employees, or your product/service negligently causes physical injury to someone, property damage, or advertising injuries. It offers protection against liability claims from a customer or client, which can include legal fees and any judgments against you.
What general liability covers:
- Bodily injury claims
- Medical payments if someone is hurt on your property
- Property damage caused by your business or employee(s)
Whether your business is located in an office, a warehouse, or even your home, you do need general liability insurance.
2. Professional Liability
Sometimes called “errors and omissions insurance”, professional liability focuses on protecting your reputation if you make a work mistake that causes injuries or financial losses. An unsatisfied customer could sue you for damages for example, which puts your business in jeopardy.
Professional liability covers:
- Mistakes or omissions in work.
- Missed deadlines or undelivered services.
- Breach of contract.
- Giving the wrong advice.
- Reputational harm in case you face prosecution, libel, slander, wrongful conviction, or privacy violations.
- Advertising errors including lawsuits over copyright infringement.
Some states require professional liability coverage. Those that practice any form of medicine in Florida are required by law to have it. In addition, some clients or vendors may require you to have professional liability as part of your contract.
Businesses that typically require professional liability coverage:
- Law firms
- Home inspectors
- Healthcare providers
- Technology professionals
- Website designers
- Contracts/vendors (construction, electrician, plumber, painter, roofer, etc.)
3. Property Insurance
Whether you own, rent, or lease a space for your business, you need property insurance. Property insurance covers the building and property (landscaping, parking lot, signage, fencing, etc.), as well as your equipment, electronics, and the furniture in your office.
Covered events can include fire, theft, and storms. Be sure to check your policy, however, as most general policies do not cover natural disasters like earthquakes, hurricanes, or floods. You may need to have a separate policy for those events, particularly if you are in a state/region that is prone to certain natural disasters, like Florida.
The property owner should cover the building itself and outdoor property if you rent or lease space. You are responsible for everything inside the office/building, however.
4. Workers’ Compensation
Workers’ compensation insurance is designed to cover the medical bills or lost wages of employees who are injured on the job. This coverage also includes disability and death benefits. Workers’ compensation is generally required if you have more than one employee but check with your state’s Department of Labor to see the specific regulations.
The amount of workers’ compensation you’ll need is based on the risks inherent with your industry, the number of employees, and the cost of living where you live. Most states require a minimum standard so be sure to comply with the state regulations. If you employ people who live in other states, you will need to know its laws, as well.
5. Product Liability Insurance
If you manufacture and/or sell products to the general public (B2C) or another business (B2B), you will need product liability insurance. This type of policy will cover your legal expenses stemming from injury claims or property damage due to a product that you manufactured, distributed, or sold. This might include damages or injuries caused by defective products or corrupted software. It may also cover claims regarding marketing defects, improper labels, or lack of warnings on packaging.
6. Commercial Auto Insurance
If your company uses vehicles for any business purposes, you need commercial auto insurance. It will protect your business in the event of an accident in which you or an employee is at fault.
There can be some confusion as to what constitutes using a vehicle for “business purposes.” For example, a commercial policy is not generally applied if an employee uses his/her vehicle for things like driving to a meeting or dropping off a package. Those activities would be covered under the employee’s personal auto policy. A commercial policy would only be needed if the employee performs these activities as a regular part of his/her job.
One other option is to buy a hired and non-owned auto (HNOA) insurance policy, which provides liability coverage for vehicles that are used for business purposes but are not owned by your business.
This would cover:
- Employee-owned vehicles
- Vehicles leased by a business
- Vehicles rented by a business
7. Business Interruption Insurance
Business interruption insurance will help cover lost income, expenses, and relocation costs if your business has to shut down due to damage from a natural disaster, fire, or other catastrophic events.
There are some limitations and restrictions on what a covered event is. For instance, most policies do not cover business closures due to COVID-19. Business interruption is meant to cover work stoppages that are related to physical damage or loss of property.
8. Cyber Liability Insurance
Cyber insurance is a policy you may not have considered. Cyberattacks are an all too frequent occurrence these days and small businesses are definitely not immune. Whether you sell merchandise or provide services for clients, your business could be at risk of a cyberattack if you store or use private customer or client data and information. If there is a cyberattack and that data is compromised or stolen, you will be held liable. Cyber insurance also covers hacking and viruses that corrupt files or your entire network.
Businesses that need cyber insurance typically handle:
- Credit card or bank account information.
- Medical records and information.
- Social Security or driver’s license numbers.
- Customer names, passwords, birthdays, email addresses, phone numbers, addresses, and other personally-identifying information.
- Computer, software, or cybersecurity services for other businesses.
These are the most common types of insurance policies small businesses need and should consider. Other types of commercial insurance you may need but that weren’t covered include:
- Employment practices liability
- Directors and officers insurance
- Liquor liability
- Inland marine insurance
- Commercial umbrella insurance
Protect your business with commercial insurance
Having commercial insurance is necessary if you want to stay in business. It protects your assets, property, and reputation. It’s very important to protect your assets so you don’t end up in a financial disaster. These eight types of insurance are necessary for most small businesses that have one or more employees.
Avante Insurance can help you secure the right commercial insurance to protect your life’s work. Contact us to talk about your business needs and request a quote. We will ensure you have the right coverage to protect the enterprise you’ve worked so hard to grow.
This blog and website are made available by the publisher for educational and informational purposes only. It is not to be used as a substitute for competent insurance, legal, or tax advice from a licensed professional in your state.