Risk is inherent in entrepreneurship. You would not take this route if you were afraid of uncertainty, but it would be unwise to continue without having adequate protection from any predictable financial losses.
In many cases, insuring your company is a necessity. But the challenge is knowing which aspects of your enterprise to insure. There are more than 5 types of business insurance on the market; let us shed light on the most common ones to help you choose which coverages to get.
Home Based Business Insurance
Sometimes, bedrooms and garages are the home of fledgling companies. If you are planning to build your business empire in your humble abode, do not rely on your basic homeowner’s policy to cover any potential damage to your equipment and/or inventory.
Ask your insurer for any relevant riders to get additional appropriate coverages for your home-based business. Otherwise, your dreams may turn to ashes when disaster strikes, and you may be left high and dry.
In the US, the chances of getting involved in a car accident and sustaining an injury in a single year are low. Our friends at Carsurance say that it is just 0.7%. But this fact is not an excuse to run your business close to the edge.
If you intend to use your personal vehicle or a different one for any commercial purposes, you ought to get car insurance. Do not assume your personal policy will cover you. Notify your auto insurance carrier about any business activities relevant to the vehicle in question. This way, you will know whether or not you need a different policy to cover third-party injury, third-party property damage, and others.
General Liability Insurance
This umbrella coverage can protect the financial health of your company against several dangers such as lawsuits and medical claims. It is probably the handiest of all types of business insurance, but it is not a cure-all. As with others, understanding the contents of a general liability insurance policy is the key.
Errors & Omissions (E&O) Insurance
Also known as professional liability insurance, E&O insurance specifically covers negligent claims due to any mistakes in professional services. E&O insurance policies vary from industry to industry, so make sure to get one that makes sense in your domain. Professional indemnity insurance, which is designed for consultancies, is a shining example.
Product Liability Insurance
This coverage is a non-negotiable requirement if your company manufactures goods that it intends to sell on the general market. This insurance can pay for any damages you are deemed accountable for as a result of a court decision to compensate a plaintiff who has suffered because of any of your manufactured products. Like E&O insurance policies, product liability ones are not the same. Get coverage that suits your particular commodity.
Workers’ Compensation Insurance
If you employ several people (or even just one), you have to get this insurance. It does not matter if your employees or staff are generally not exposed to perils. Seemingly harmless medical conditions could result in expensive claims that might drain your company’s finances.
Business Interruption Insurance
This type of coverage can bail your company out in the event of an interruption to your regular business operations. Do not underestimate the opportunity to cut the cost of downtime regardless of its length, since it could occur at a crucial period.
Business Property Insurance
This insurance can cover the damaged physical assets of your company. It can provide the necessary capital to rebuild or renovate your commercial property and/or replace ruined pieces of furniture and machinery under certain conditions.
Key Person Insurance
Let us face it, employees are not equal. Your business will likely depend on some individuals more than other members of your organization. To protect your company from any losses due to a critical talent’s inability to work, this insurance can compensate you.
Business Owner Policy (BOP)
If you are thinking, “What type of business insurance do I need to buy to have all coverages in one fell swoop”, this is it. A BOP bundles most of the financial protection you may need for the sake of simplicity and affordability. It may include basic coverages only, though. If you feel you require higher protection for certain risks, you may have to get some policies individually.
At first glance, some business insurance policies may seem redundant and unnecessary. But each one exists for a reason. Take your time to explore every single coverage out there and envision all of the financial risks that may compromise your company’s cash flow to insure your business accordingly.