What kind of insurance do you need for a small business? This is a question asked by many small business owners that are buying commercial insurance for the first time.
What Kind Of Insurance Do You Need For A Small Business?
When it comes to small business, there are lots of different types of insurance out there. But how do you know what kind of insurance you need for your small business? It starts with understanding what is available, and what factors determine the type of insurance you should choose.
Of course, it goes without saying that it also depends upon your budget, particularly when it comes to choosing deductibles and coverage limits. Let's start with liability insurance:
The first type of insurance that we're going to cover is commercial general liability. General liability is the most common type of commercial insurance, and in most cases, the least expensive. General liability protects you against things like accidents and injuries due to negligence. If someone gets injured on your property, general liability protects you. It also protects you against things like slander and libel and other legal expenses and judgments.
Within the category of liability insurance there are a number of other subcategories of liability. Some of these include errors and omissions insurance, liquor liability, cyber liability, environmental liability, media liability and pollution insurance just to name a few. You will have to talk to your insurance agent to find out exactly what is covered by your general liability policy and what additional forms of liability insurance you may need to take.
This will differ with each type of business out there. For example, a retail store is probably going to need premise liability insurance, in case something happens to a customer visiting their location. On the other hand, a financial firm that deals with sensitive customer information might benefit from cyber liability insurance protection.
Workers Compensation Insurance
Nearly everyone has heard of workers compensation. This insurance helps to replace lost wages and pay medical expenses of someone who is injured on the job. Workers comp was created not only to protect the employee from huge medical expenses that they can't pay and lost wages from not being able to work, but also to protect the employer from getting sued and losing their business over such a lawsuit.
But not every type of business out there needs worker's comp. In fact, if you are running a business by yourself, you might not need it at all. If you are running a business where the people that you hire are independent contractors, such as a direct sales business, you also might not need workers comp. Typically, the only time that you need to get this insurance is when you have salaried or hourly employees or you are contractually required to do so.
Commercial Auto Insurance
There are a couple of scenarios where you might have to get commercial auto insurance for your business. The first one is if you, or any of your employees, use a personal vehicle in which to do work tasks. Your employees may be responsible for their own insurance, depending upon the way you have your company set up, but for the business owner using a personal vehicle, commercial auto insurance is vital.
You will also need business auto insurance or fleet insurance if you have vehicles that you use to run your business. Some common examples of businesses where this is the case include truckers, moving companies, florists, delivery services and transport organizations. If you are just using your car to get to work and back, even if you are self-employed, you usually do not need commercial auto insurance, even if you get a tax deduction for the time you are driving to and from places.
Other Types Of Business Insurance
There are other types of commercial insurance out there as well. For example, there are types of insurance based upon the particular industry that you are in, protecting you against the challenges and problems that you might face within that industry.
What Kind Of Insurance Do You Need For A Small Business? - The Bottom Line
We hope this article on what kind of insurance do you need for a small business? has been informative. You should ask your insurance broker to show you all of the options that you have within your industry, as well as the standard business insurance options. Don't forget to look into adjusting your deductibles and coverage limits so that you are getting exactly what you need and not paying any more money than you need to for it. And don't forget, insurance is a business expense if it's purchased for your business.