Starting a small business is an exciting venture, but it requires a lot of research and planning. If you are starting a small business or already have your own small business, it is crucial to know the insurance basics. Not only does small business insurance protect you from liability and secure your assets, but it may also be legally required in your state.
If you do not find the right insurance for your small business, including the right types of insurance, you may end up paying out of pocket for your claims. Large, unplanned expenditures can severely cripple a small business and may result in you closing your doors. Keep reading to learn the insurance basics for small businesses and how to protect your company.
What are the insurance coverages needed for a small business?
Your first step when choosing insurance coverage for your small business is to research your state’s requirements. Some states require general liability, professional liability, workers comp, and other types of insurance in order to operate a business. The most common types of insurance for small businesses include:
- General liability insurance
- Professional liability insurance
- Business income coverage
- Commercial property insurance
- Workers’ compensation insurance
- Commercial auto insurance
- Data breach insurance
- Commercial umbrella insurance
- Employment practices liability insurance
- Business owner’s policy
What is general liability insurance?
General liability insurance can protect your small business in a variety of situations. If someone slips and falls in your store, general liability insurance can help cover medical expenses. You may also need to include product liability insurance, which can protect your business in the event of claims of injury or damage caused by your products. If you do not have adequate general liability insurance, you could end up paying for medical bills and other major expenses out of pocket.
General liability insurance is typically not required by law, but it may be necessary to acquire a license for your business. You may need general liability insurance if you apply for a professional license, sign contracts or create partnerships with other companies, or sign a lease on an office.
What is workers comp insurance?
Small businesses must also have insurance that helps protect them in the event of an injured or sick employee. With workers’ compensation insurance, you can help cover medical bills for accidents or injury caused by your business. For example, if an employee has carpal tunnel due to typing for years as part of their job, your insurance can help cover their medical expenses. Many states require workers’ compensation insurance for small businesses.
What is property insurance?
Commercial property insurance is necessary to help protect your business assets. If any of your business property is damaged, commercial property insurance can help cover the repairs. Commercial property insurance does not just include your building. It can also cover furniture, equipment, and tools for your business. Verify that all of your property is covered when choosing a policy.
Do I need auto insurance?
Not all small businesses need commercial auto insurance, but it can help protect your business. If you have employees driving as part of your business, commercial auto insurance is a must. If your employees are in an accident while driving as part of their job, commercial auto insurance can help cover the damages.
