Just as you would get car insurance to cover your vehicle (which is required by law anyway) or homeowner’s insurance to cover your house, it’s important for any business owner to have proper business insurance as well. Whether you’re a small-business owner or you’re expanding your business into something bigger, you’ll need the right types of insurance and the right levels of coverage to protect you from business risks. Business insurance largely exists to protect you from lawsuits as well as to cover damages to your business like property damage caused by vandalism, medical expenses for employee injuries or work-related illnesses, products lost to theft, or income lost through other means.
Of course, everyone’s situation is different. You’d likely want collision coverage on a new car, but for a used model, you may not deem it necessary. The deductibles and premiums may simply be too high to be worth it. Just as you may not need comprehensive coverage for your car, you may not need every type of coverage for your business. Still, before dropping your comprehensive car insurance, you’d likely want to contact your insurance company and discuss whether you’ll be covered for what you do need once comprehensive coverage is gone.
Whether you’re a clothing retailer that sells scarves, dresses, and other women’s clothing, an online retailer of vitamin supplements, or anything in between, you’ll need insurance policies to protect your business. While you may not need full coverage everywhere, here are the most common types of business insurance and how much you can expect to purchase.
Professional Liability Insurance
Professional liability insurance (PLI) is a type of liability coverage that protects your business against claims of negligence or malpractice. Such claims are common in the worlds of medicine and finance, so you’ll certainly want full coverage if you’re running a medical practice or accounting firm. It’s important to note that an insurance company won’t cover criminal charges under this type of plan, so it’s crucial to pay attention to the wording of your contract.
You may not need such comprehensive coverage if your type of business isn’t generally open to negligence claims. You’ll still need general liability insurance, however. This covers you in case of claims that your business operations resulted in personal injury, property damage, or loss of property. If a customer slips and sustains a bodily injury in your store, for example, they may be able to file a lawsuit to try and hold your business responsible for their medical expenses. Issues like this are compounded even further when personal injury results in a loss of life. You can’t afford to cover these costs out of pocket, so ensure that you have liability coverage before you even open.
Workers’ Compensation Insurance
This kind of coverage is needed for the vast majority of businesses that hire employees. Unless you’re an absolute business superhero, yours likely falls into this category. Worker’s comp is used to cover employees who have injuries at work or who suffer from work-related illnesses. Benefits can include paying for medical care, disability payments, vocational rehabilitation, or even death benefits in case of a catastrophic injury that leads to death. State laws generally require that businesses carry some level of workers’ compensation insurance.
Property Insurance
You wouldn’t want collision insurance left off of a car that would be costly to repair or replace, and you don’t want to leave insurance off of your valuable building and equipment either. Whether you own your business space or you’re renting it, property insurance is a no-brainer. This insurance protects your equipment, furniture, inventory, and more in the event of fires or other unforeseen events.
It is important to note that buildings may not be covered automatically for less common events like floods or earthquakes. If your building is in an area prone to such occurrences, you’ll likely need to purchase more comprehensive coverage. Always consider the area you’re in, the kind of business you’re running, and the level of protection you’re likely to need to determine if you have the best level of business coverage for your situation.