The unexpected can easily sideline any business. A product defect, cyber attack, serious illness, or work-related automobile accident can all force business owners to close their doors if they’re not prepared. Luckily, the right insurance coverage can keep you safe from financial ruin in case of the unexpected. Here are eight types of insurance policies that can help minimize your risk.
1. General Liability Insurance
General liability protects you from claims of bodily injury, property damage, or negligence. The policy pays for obligations that stem from a successful lawsuit against you. Some of these obligations may include medical expenses, slander, libel, the cost of your legal defense, judgments, and settlement bonds. Most small businesses should have this type of insurance policy.
2. Product Liability Insurance
If you manufacture, sell, or distribute a product that causes injury, the injured party can sue you under product liability laws. Product liability occurs when a manufacturer or seller puts a defective product into the hands of consumers or fails to properly instruct them about how to use it. Product liability insurance can protect you from the costs you would incur if it is determined that you are guilty of causing the injury.
3. Commercial Property Insurance
If a fire, storm, or theft hits your business, you could lose valuable equipment, inventory, machinery, or suffer damage to the property. But if you have property insurance, the insurer would reimburse you for these losses. Keep in mind that if your business is located in a high-risk area, such as a coastline, you will likely need to supplement your property insurance policy with windstorm and flood insurance. Ditto earthquake insurance in California.
4. Cyber Insurance
According to InformationWeek, in response to beefed up security at larger companies, cyber thieves are focusing their efforts on small and medium-sized businesses. Cyber insurance can be especially important for small-business owners because of the rising costs of recovering from a cyber attack. Cyber insurance coverage may include indemnity for customer damages, the cost of the investigation, including the IT forensic examiners, fees for a public relations firm to address negative publicity regarding the breach, lawyers’ fees, customer identity theft monitoring fees, and regulatory fines and penalties. In addition, if your business is interrupted due to a data breach or other attack, a cyber insurance policy can cover your lost revenue.
5. In-Home Business Policy
If you work from your home, your homeowner’s policy won’t cover business liabilities if there is a loss — unless take out additional coverage for inventory, equipment, and loss of income in case of a problem. But even this coverage will be limited. To get more coverage for your business, consider an in-home business policy. It protects against theft, liability for injuries, business equipment, and loss of important documents. The policy will usually cover businesses with three or fewer employees.
6. Vehicle Insurance
If you or your employees use an automobile for business purposes, it’s important that you insure them with a business vehicle insurance policy. According to the Insurance Information Institute, a personal policy will not provide coverage for a vehicle owned by your business, or for a vehicle used primarily in the business, whether it belongs to you or your employee. Even if you only use the vehicle occasionally for business purposes, and you or an employee cause a serious accident, the personal policy won’t have the same liability coverage you can get from a business vehicle policy, which leaves your business open to a lawsuit. Fully insuring all vehicles used for business purposes can help protect your company from liability in case you or an employee causes an accident that results in damages.
7. Professional Liability Insurance
This type of policy will cover your company in case of a negligence claim that stems from an error or a failure to perform your duties, which leads to a client’s financial loss or inability to conduct business. The policy is also known as errors and omission insurance, and makes sense for businesses that provide client services, such as doctors, consultants, and lawyers.
8. Business Interruption Insurance
If a disaster occurs and forces you to close your business because you or your employees can’t physically get into the business, make sales calls, or manufacture your product, the loss of income can be devastating. Business interruption insurance reimburses you for lost income while your business is closed or during its rebuilding after a catastrophic event.
You work hard to maintain and grow your business, and it would be a shame for a lawsuit or disaster to destroy it. Contact your insurance agent and ask about which policies are right for you.