Discover the Essential 13 Insurance Types Every Small Business Needs!

There is insurance for almost everything (even paranormal infestations). So it should come as no surprise that there are so many types of insurance for your small business as there are for other parts of your life.

Almost every small business is likely to benefit from some amount of business insurance, and yes, I’m including the self-employed and side hustlers here as well. But the specific type of insurance(s) any business needs will vary greatly by industry and service.

We’ll go over some of the most common types of business insurance so you can get an idea of ​​what your business may need.

1. General liability insurance

As the name suggests, general liability insurance covers a wide range of liability situations that you may face as a business owner. Some common examples can be:

• Liability for bodily injury and property damage
• personal injuries
• medical payments
• Advertising damage (copyright infringement)
• Reputational damage (libel, slander, etc.)

Please note that liability insurance covers damages caused to a third party, not to you (the “first party”). For example, it does not cover theft or damage to your property.

2. Professional Liability / Errors and Omissions Insurance

In addition to general liability insurance, small businesses that provide a service should consider professional liability insurance. This includes occupations such as accountants, designers, consultants, and real estate agents.

Sometimes called an errors and omissions (E&O) policy, professional liability covers a business in the event that it is sued by clients or patients for alleged negligence. In other words, if a mistake is made, if something is forgotten, if something just goes wrong and your company is sued for it, an E&O policy could cover legal fees and settlement costs.

3. Cybersecurity insurance

There are more than 1,000 data breaches each year. If your business falls victim to one, you could face damage in all sorts of ways. For one thing, your company data could be stolen, which can be expensive to recover (if even possible).

Arguably worse, customer information could be stolen (putting you on the hook for your damages). Cybersecurity liability policies can include coverage for things like data recovery, digital security upgrades, and even customer refunds.

4. Commercial auto insurance

There are two common situations in which you may need commercial auto insurance:

• You are driving a vehicle owned by your business.
• You are driving a personal vehicle while conducting business.

In any case, your personal car insurance it is unlikely that it will be applied, which makes a trade policy necessary. Commercial auto insurance covers many of the same things as personal auto insurance, including liability for injury and damage, as well as damage to the vehicle from things like theft or weather events.

Shared ride insurance

A common reason you may be using your personal vehicle for business purposes is if you work for a rideshare company as a contractor. While some rideshare companies offer limited insurance coverage for their drivers, there may be gaps, such as when you’re not actively on a ride request. Since personal insurance policies may not kick in at all if you are “on time”, you may need a rideshare endorsement to fill any gap.

5. Commercial Property Insurance

Commercial property insurance is basically like homeowners insurance, but for the property you buy for/with your business. It typically covers buildings, as well as items like inventory and equipment, for covered events like fires or falling trees. Like homeowners insurance, you may need a special endorsement if you want to get flood insurance for your business property.

6. Income Insurance / Business Interruption

If you have a good commercial property insurance policy, chances are your building and inventory are covered. But what about the business you lose while you repair or rebuild your office or store? That’s when business income insurance (sometimes called business interruption) comes into play.

This type of policy can help cover expenses if your business closes due to a covered incident, such as fire or theft. Typical coverage may include:

• lost net income
• Mortgage, lease or rent payments
• loan or credit card Payments
• Temporary relocation expenses
• payroll expenses
• routine bills

For example, suppose your small coffee shop has a fire. Commercial property insurance may cover the cost of building repairs and may cover any damaged or destroyed equipment. But you won’t do anything with the money you’ll lose while those repairs are done. Business income insurance can cover lost income and help you pay payroll in the meantime.

7. Home-based business insurance

While some types of businesses have to run out of business space, many of us run our small businesses from our homes. However, that doesn’t mean you can skip some form of commercial property insurance, even if you have renters or homeowners insurance.

typical home insurance has limited coverage for equipment and/or inventory related to a home business. If your existing policy doesn’t offer enough coverage, you may need a home-based business policy to get adequate protection.

8. Special event insurance

Many types of special event insurance are advertised for people who host their own events, but it may also be beneficial to purchase if you are a professional planner. This type of coverage protects event planners in all types of scenarios, such as injuries, damage to venues, and sudden weather events. It can also apply to damages in the event a vendor goes bankrupt or the event is cancelled.

9. Intellectual property insurance

There are two main types of intellectual property (IP) insurance:

• Infringement Defense: This is what you need if your company infringes someone else’s intellectual property and is sued
• Reduction Execution Coverage: This is what you need if you need to sue someone else for using your IP.

Many general liability policies will include some form of infringement coverage in their advertising liability clauses.

However, if you are in a highly creative field and your intellectual property is your bread and butter, you may need a separate policy or endorsement with reduction compliance coverage to help you protect your own trademarks, patents, and other rights. copyright against theft or misuse. .

10. Workers’ compensation insurance

If you have employees, workers’ compensation insurance is a mandatory legal requirement. Not having the required workers’ compensation insurance can result in heavy fines.

A typical workers’ compensation policy will cover a large number of related expenses in the event an employee becomes ill or is injured while on the job. This may include:

• medical bills
• lost wages
• Rehabilitation
• funeral expenses
• death benefits

Some workers’ compensation policies may also help cover legal expenses in case there are lawsuits as a result of the covered incident or illness.

11. Product Liability Insurance

No matter how many rounds of testing your products go through, something can go wrong. If that happens, you’ll want insurance that covers your products. Product liability insurance helps protect your business in the event a product you produced, distributed, or sold proves defective and causes personal injury or bodily harm.

Be aware of the latest on injuries and damages. This type of insurance will not kick in if there is a misprint on a jersey and you need to be reimbursed. But if the shirt turns out to be radioactive and your customer suddenly has two heads, then you probably have a product liability claim.

12. Commercial umbrella insurance

Even the best insurance has a limit on how much it will cover. If you’re concerned that your regular business insurance policies won’t offer enough coverage, a commercial general policy could help cover any excess.

For example, suppose someone slips and falls in your office and you are sued for $1 million. If your general liability policy has a maximum of $500,000 for personal injuries, a general policy could cover the remaining half a million.

If you’re running a small home-based business with no employees, a blanket policy may not make sense. But if you have a lot of customers and/or employees visiting your business property, or spending a lot of time at other people’s properties, then it can be beneficial.

13. Combination with business owner’s policy (BOP)

the same way you can people safe package, you can buy commercial insurance that is already included. For example, many insurance companies will offer you a Business Owner’s Policy (BOP) that includes both property and liability insurance in one policy. Specific coverage options will vary by carrier, but you can often add additional endorsements if you have other needs.

Grouping your business policies into a BOP can make tracking them much easier. It can also be less expensive than buying individual insurance policies.

Some coverage is often better than no coverage

No matter how small your business is, definitely consider getting the right business insurance. Few of us see trouble coming until it happens. Yes… or, let’s face it, when — something goes wrong, you’ll be glad you were prepared.