Small Business Insurance It is especially important for small business owners to carefully consider and evaluate their business insurance needs because they may have more personal financial exposure in the event of a loss.
If a business owner does not feel he or she has the ability to effectively assess business risk and the need for coverage, they should work with a reputable, experienced, and licensed insurance broker.
You can obtain a list of licensed agents in your state through your state’s department of insurance or the National Association of Insurance Commissioners. Small Business Insurance
- 1 Small Business Insurance
- 2 Types of Business Insurance
- 3 WHAT DOES SMALL BUSINESS INSURANCE COVER?
- 4 BUSINESS PROPERTY COVERAGE
- 5 GENERAL LIABILITY COVERAGE
- 6 BUSINESS INTERRUPTION COVERAGE
Small Business Insurance
Also known as commercial lines insurance, these coverages include property and casualty insurance products for businesses. Commercial lines Insurance helps keep the economy running smoothly by protecting businesses from potential losses they couldn’t afford to cover on their own, which allows businesses to operate when it might otherwise be too risky to do so.
Types of Business Insurance
Several types of business insurance that small business owners might consider, including the following:
Professional Liability Insurance
Professional liability insurance insures against negligence claims that result from mistakes or failure to perform. There is no one-size-fits-all professional liability coverage. Each industry has its own unique concerns that should be addressed.
Property insurance covers equipment, signage, inventory, and furniture in the event of a fire, storm, or theft. However, it doesn’t cover mass-destruction events like floods and earthquakes. If your area is at risk for these issues, you’ll need a separate policy.
Small Business Insurance Another exception is personal property that is very high value and expensive—this is usually covered by purchasing an addition to the policy called a “rider.” If there’s a claim, the property insurance policy will either reimburse the policyholder for the actual value of the damage or the replacement cost to fix the problem.
Homeowner’s policies don’t cover home-based businesses like commercial property insurance covers businesses. If you’re operating a home-based business, inquire about additional coverage for equipment and inventory.
Also Read: Does My Business Need Flood Insurance?
Product Liability Insurance
If your business manufactures products to sell, product liability insurance is very important. Any business can find itself named in a lawsuit due to damages caused by its products. Product liability insurance protects a business in such cases.
Small Business Insurance Any vehicle used for business should be fully insured. At the very least, businesses should insure against third-party injury, but comprehensive automobile insurance will cover the vehicle in an accident, as well. If employees are using their own cars for business, their own personal insurance will cover them in the event of an accident. One major exception is if a person is delivering goods or services for a fee, including delivery personnel.
Business Interruption Insurance
Business interruption (or continuation) policies are a type of insurance that is especially applicable to companies that require a physical location to do business, such as retail stores or manufacturing facilities. Business interruption insurance compensates a business for its lost income during events that cause a disruption to the normal course of business.
WHAT DOES SMALL BUSINESS INSURANCE COVER?
Depending on the coverage you choose, a business owners policy helps protect your business against things like financial losses and covered perils. Covered perils may include theft, fire, wind, falling objects and lightning. It’s important to read your policy documents carefully to understand which coverages are included and what perils are covered by your insurer.
Small Business Insurance Each coverage in your BOP has a coverage limit. A limit is a maximum amount your insurer will pay for a covered claim. It’s also important to note that each coverage in a policy is typically subject to its own limit.
And, some coverages may come with a deductible. A deductible is the amount of money you pay out of pocket toward a covered claim.
BUSINESS PROPERTY COVERAGE
The property coverage in a business owners policy helps protect your business’s building and its contents against covered perils. For example, if there is a fire at your business, a BOP may help pay for building repairs (if you own the building). This coverage also helps replace business property, such as office furniture, computers or machinery.
Keep in mind that business property coverage will be subject to a deductible and limits. You can typically choose your property coverage limits based on the estimated cost to repair, rebuild or replace your business’s property. Small Business Insurance
But, if your losses exceed the coverage limit you chose, you’ll then need to pay out of pocket to finish building repairs or replacement of your business’s property. It’s important to note that having insufficient policy limits may also result in a penalty. This is a fine you’d need to pay for not purchasing enough insurance. To help avoid penalties, make sure you purchase enough insurance to cover your business and its contents.
GENERAL LIABILITY COVERAGE
A business owner’s policy usually includes general liability coverage (sometimes called commercial general liability, or CGL). If a customer or visitor is injured at your business, and you’re found liable, general liability coverage may help pay for the injured party’s medical expenses. It may also help pay for legal costs if you’re taken to court over an accident that occurred at your business.
Small Business Insurance Commercial general liability insurance is also subject to a coverage limit. That means if an injured person’s medical bills exceed your coverage limit, you may have to pay out of pocket to cover the rest.
BUSINESS INTERRUPTION COVERAGE
Business interruption coverage, sometimes called business income coverage, is also typically part of a business owner’s policy. This coverage helps replace the lost income and extra expenses if your business is affected by a covered peril.
Small Business Insurance, For example, says a tornado or fire makes your office uninhabitable. Business interruption coverage may help pay for rent costs at a temporary office while repairs are made. Business interruption coverage may also help replace lost business income due to a covered peril.
Similar to other coverages in a BOP, you will be subject to a limit. You may also be subject to a time period. This means the coverage may only last for 6 months, for example, so be sure to ask an agent about specific limits.