Types of Insurance Businesses Should Have

Types of Insurance Businesses Should Have

Business Insurance

Nowadays, there are a lot of businesses, both big and small, that operate both online and offline. That being said, many new companies are created each day, as the life of an entrepreneur is quite appealing to many people. While starting and running a business can be quite an exciting journey, there are many things you need to do before reaching success. 

One thing, in particular, is obtaining all the necessary insurance your business may need. This is something that requires extensive research, just like a football fan would research NFL point spreads before a major game, for instance. Analogies aside,  knowing which insurances to obtain will, of course, depend on the nature of your business. There’s no need to pay insurance premiums unless you need them. 

After all, you want to reduce overhead expenses as a business owner, not increase them. Moreover, you want to be insured should something go wrong and save your business from financial issues and even potential bankruptcy. But overhead costs are a story for another time. Instead, let’s have a look at the types of insurance your businesses should or might need. 

Business liability insurance

Every business that sells products or services must have business liability insurance. The main reason is that in case your products or services should cause bodily harm or injuries to customers – in which case you may get sued – you’ll be adequately protected. You’ll be able to pay for any damages and legal fees that will follow. 

As you may already know, lawsuits resulting from claims filed against you or your company can cost a small fortune. This type of insurance is called General Liability Insurance, and you will need it if nothing else then, just in case. If you don’t have this insurance, every legal fee, property or bodily damage compensation will have to be paid out of your own pocket. 

Property insurance

The name property insurance says it all, but it’s important to dig a bit deeper into what that involves precisely. The main reason is that there are several different types of property insurance, and not all of them have the same coverage. If you own company property or rent one out, like an office or something similar, you’d might want to consider obtaining property insurance. 

For example, some property insurance policies protect your premises from natural disasters and vandalism, but they don’t cover the inventory in the office. Therefore, make sure you know exactly what kind of policy you may need and what you want to insure before you opt in.

Workers compensation insurance

As a business owner, you’ll most likely have employees at some point unless you plan on being a solopreneur your entire career. Once you do bring in new employees, you should also consider workers’ compensation insurance. This insurance protects your employees from any injuries and fatalities they might experience while working. 

Their medical bills and everything rest are adequately covered, and in case of the loss of life, employees’ families are also compensated and included in the coverage. It’s a bit grim to have this coverage, but you never know what will happen, even at the everyday office where there’s little to no chance that something might go terribly wrong. If your employees opt-in for this insurance, they also forfeit their right to sue you or your company should something go wrong. 

Commercial auto insurance

Commercial auto insurance should be on your priority list if you have company vehicles of any sort. This can mean anything from company cars employees use for commuting to a fleet of trucks used to distribute goods to retail shops or customers. 

As the name suggests, commercial car insurance covers any damages that result from accidents and collisions. The coverage can also include employees’ personal vehicles they use to come to work, should you decide to insure them, of course. And, considering how many crazy drivers are out there, this insurance policy might come in handy should something goes astray. 

Data breach insurance

A data breach can have devastating consequences for any business, large or small. The loss of customer confidence and the potential legal liabilities are just two of the many risks associated with a data breach. That’s why it’s so important to have data breach insurance in place. That being said, almost every business today operates online in one way or another. Everything you store in digital format is a potential target for cybercriminals. That being said, here are a few things that data breach insurance coverage involves.

  • Covers any financial losses as the result of a data breach.
  • Third-party liability insurance – covers any lawsuit expenses if customer data is compromised, expenses of hiring an IT expert to assess the situation and so on.
  • Replacement of hardware and software that was compromised (if necessary, of course)
  • Costs of notifying customers, hiring crisis teams, ensuring functional call centers etc.

Therefore, data breach insurance is a bit more technical and requires careful consideration. Of course, the more aspects of your business are covered by this insurance policy, the higher the premium will be. However, a data breach alone can be quite a devastating event for both your business finances and reputation. 

That’s why it might be worth considering this insurance, no matter the costs. After all, data breaches have become more frequent and more sophisticated, not to mention the fact that small businesses are usually the primary target for hackers as they don’t have great security measures like some corporations do.

Errors and Omissions insurance

Errors and omissions insurance is a type of professional liability insurance that protects businesses and individual practitioners from claims arising from errors or omissions in their professional services. This type of insurance can help protect your business from financial damages that may result from any mistakes you or your employees make while providing services to clients, as well as protect you from legal issues that result from claims made against you. 

Now, these services usually involve medical practices, dentistry, carpentry and other service-based offers. However, even consultancy can be included in errors and omissions as someone can make the wrong financial decision or at least claim that they’ve made a mistake because of your bad advice. So if you provide any type of services that may affect a client’s life, no matter how small of a way, errors and omissions, insurance should be your priority. Simply put, this insurance policy is similar to general liability insurance but more oriented and tailored towards service providers. 

Insurances are of vital importance for businesses because you never know if something might go terribly wrong. Even though you’re paying for something that protects you from lots of maybes, it’s better to have it and never use it than need it and not have it.