Running a small business involves taking risks. But, you don’t want to take chances with factors that might cost you a lot of money. While you can’t avoid every threat, you can protect yourself with business insurance. Different types of small business insurance lessen the financial impact of potential future losses.
Types of small business insurance
Do you know your business’s major risk factors? Don’t wait to find out what you need to cover until after you suffer a loss. Prevent an expensive disaster with these types of business insurance.
1. General liability insurance
General liability insurance covers property damage, bodily injury, and personal injury caused by business operations.
Mistakes in your business operations could physically harm someone or their property. Mistakes could also damage someone’s reputation or interfere with their privacy. General liability insurance covers medical costs, property damages, and legal fees. For example, if you own a construction company and a customer’s property was damaged, general liability insurance would cover the cost of the damages.
General liability insurance does not protect you from claims of negligence. Negligence means you could have prevented damages, but you didn’t. Let’s say someone slips in your parking lot because you didn’t shovel the snow. The insurance company does not cover the costs because of negligence.
Accidents caused by business operations can be costly to your business. Without insurance, one mistake could cost enough to cause your business to close.
If you see clients in person, have access to their properties, or represent their businesses, safeguard your business with general liability insurance.
2. Commercial property insurance
Commercial property insurance protects your business’s tangible assets from losses. What are tangible assets? They are the physical assets that add value to your company, including your building, inventory, sign, and equipment. Losses could be caused by fire, storms, or natural disasters. Your business’s property could also be damaged by theft or vandalism.
Commercial property insurance helps you replace, repair, or rebuild damaged assets and should be a part of every business emergency preparedness plan. Businesses with physical assets should have commercial property insurance.
3. Home-based business insurance
Home-based business insurance covers business losses that occur in your home. If you have homeowner’s or renter’s insurance, consider adding home-based business insurance. Many homeowner’s insurance plans only cover a limited amount of business losses. Homeowner’s insurance does not cover lost company data, inventory, or legal fees.
If you run a home-based business, you want to get this type of small business insurance. Also, look into this insurance if people enter your home for business activities (e.g., clients, employees, partners).
4. E&O (errors and omissions) insurance
E&O insurance (or professional liability insurance) covers client claims made against your business. When you provide a service that doesn’t meet the promised results, a client might sue you. E&O insurance covers legal fees, court costs, and settlements.
You should have E&O insurance if you provide recommendations, guidance, advice, or services. Common business owners that have E&O insurance are accountants, lawyers, doctors, and event planners.
5. Commercial auto insurance
Commercial auto insurance covers vehicles you use to run your business. This type of small business insurance is similar to personal auto insurance. It covers liability, collision, personal injury, and uninsured motorists.
Commercial auto insurance offers different options in eligibility, coverages, and limits than personal policies. You can have many vehicles covered under a commercial auto insurance policy.
You want commercial auto insurance if you use vehicles frequently to operate your business. Some businesses that have commercial auto insurance include truck, plow, and delivery companies.
6. Business owner’s policy (BOP) insurance
BOP insurance bundles basic coverage from property and liability risks into one package. This type of small business insurance often includes coverage for property, liability, crime, and flood. BOP also often includes business interruption insurance, which reimburses you up to a year of lost revenue from damages.
BOP insurance does not include coverage for E&O and commercial vehicles. Workers’ Compensation, health, and disability insurances are also not part of a BOP.
BOPs can be a good fit for small businesses. Usually, a BOP costs less than buying individual policies for each coverage. If you need other property or liability coverages, you can add them to the package.
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