Small services businesses take on a different set of challenges in order to grow their business. After all, there’s not always an actual product to see and touch when selling a service. But regardless if your service business is purely service-oriented or a combination of a product mixed with a service, there are risks inherent in your business. Translation: business insurance for small service businesses is just as important as it for a small business marketing products only. But one size doesn’t fit all. For instance, a landscaping business with multiple vehicles on the road and several employees would have different business insurance for small service businesses needs than say a shoe repair store that doesn’t use a vehicle in its business operations.
Let’s take a look at the five most common types of business insurance for small service businesses:
General Liability Insurance
General liability insurance is focused on protecting small services businesses from a myriad of liability risks and exposures, including bodily injury and property damage, medical expenses, and personal and advertising injury. Whether unintentional, through negligence, or your own fault, claims of damage or injury to others caused by you or your employees are covered under general liability insurance. For example, if you operate a landscaping business and one of your employees damages a fence while working on a client’s premises, you could be faced with having to pay for the replacement, or worse pay legal defense costs and possible settlement in a lawsuit. In spite of this, if you had general liability insurance, you would be covered for both damages and legal defense costs.
Commercial Auto Insurance
If you use a vehicle in your small service business, you are putting your vocation, your finances, and you at risk if you don’t carry commercial auto insurance. Whether you use your vehicle to ferry you or your employees to your client’s property or to transport equipment, commercial auto insurance provides protection from risk associated with using vehicles for business purposes. It provides payment for medical costs associated with an “on-the-job” vehicle collision and vehicle damage as a result of an accident. It even covers hail and vandalism damage. It may not be commonly known, but commercial auto insurance includes vehicles that are rented and leased, in addition to being owned by your company. Not only that, but employee-owned vehicles used in your small service business operations are also covered.
Workers’ Compensation Insurance
In a nutshell, workers’ compensation insurance provides your service business employees with coverage for medical care and lost wages should they become hurt or ill on the job. It also provides you, the employer, with assurance that your employees will not sue you. Workers’ compensation insurance is regulated and administered on a state-by-state basis, but is required by all states. Going back to the landscaping business again. If one of your employees is severely injured while using a riding mower, workers’ compensation will cover his medical bills as well as lost wages while he is off work recovering.
Umbrella Insurance
Umbrella Insurance is a meaningful source of protection from liability and risk that supplements the limits and coverage of your existing or main business insurance for small service businesses. Because standard business liability coverage has limits and exclusions, umbrella insurance is that extra security blanket that fills in the missing holes in your main coverage. Umbrella insurance is a great way to expand your coverage against bodily injury and property damage.
Business Owners Policy (BOP)
A bundle of multiple insurance coverages in one complete package, a Business Owners Policy, or BOP, typically joins together a general liability and property insurance in a single policy. This type of policy covers the small services business owner from claims made against him or his business against property damage and personal injury. Additionally, peace of mind is obtained that alleged slander, libel, or invasion of privacy claims and litigation will be covered under a BOP. Income loss and equipment breakdown are also two other important coverages in most business owners policies.
We understand that your small service business is one-of-a- kind and needs unique protection. While business insurance might not be on the forefront of your mind as your start up or grow your service business, a comprehensive business insurance for small services businesses plan will give you one less thing to think about.
