Small business owners don’t always recognize that running a business of any type involves a certain amount of risk – even if the service you offer involves little more than a desk and a laptop. If you haven’t done so already, you should consider taking steps to protect both yourself and the enterprise you’ve worked so hard to create by investing in some form of small business insurance. With more than 100 million lawsuits being filed in US state courts every year, the cost of safeguarding your operations is a small price to pay for the peace of mind it will bring you.
Things don’t always go as planned in the commercial world, and the expenses that can stem from unexpected mishaps represent a very real threat to the small business owner. Business insurance is mostly about protecting yourself financially. Whether you suffer a loss of property due to fire or theft, or your company is sued for negligence, money is inevitably going to be involved. Business lawsuits tend to run in the tens of thousands of dollars - and that’s only if you win. Having to pay damages may cost your company half as much again.
General Liability Insurance
There are a wide range of insurance types available to the small business owner, including everything from:
- coverage for your inventory and office equipment, to
- protection from mistakes made while providing your professional services
Regardless of the business you’re in, general liability insurance is the minimum amount of protection your company should realistically carry. Policy costs and coverage can vary widely however, and not every insurance policy is going to meet your particular needs, so take the time to seek the advice of a qualified agent or broker.
General liability insurance can help to protect your company against all sorts of unforeseen events, including the possibility that you, your staff, or the work you perform suddenly become responsible for an accident or injury involving a third party. More specifically, this type of policy can save you from the legal costs related to:
- Bodily injury
- Property damage
- Medical expenses
- Libel, or
While general liability coverage will protect you against the most basic legal hassles, some businesses need to consider more specific types of insurance. If you manufacture, sell, or distribute any kind of consumer goods for example, product liability insurance can serve as important financial armor should anyone ever be harmed as a result of a defect in one of your products.
Let’s take a brief look at some of the other common types of small business insurance, and the circumstances under which they might just come in handy:
It’s important to protect the property belonging to your company from loss or damage in the event of a fire, theft, or vandalism of your business premises. Commercial property insurance most commonly reimburses your business for such basics as inventory, tools, computers, and other office equipment, but can be extended to include everything from buildings, to loss of income resulting from interrupted earnings.
Professional Liability Insurance
Sometimes mistakes happen – especially if you’re in the business of providing professional services as a notary, consultant, or realtor, or you work as a hair stylist or technology provider. Having professional liability insurance becomes especially important when you’re charged with committing inadvertent errors or omissions (E&O) in the line of duty - including failure to perform, or responsibility for financial loss – because you won’t be protected by your general liability insurance.
If your company owns a dedicated commercial vehicle that carries product, equipment, or even employees, you should obtain specialized insurance to protect yourself against the costs associated with collisions or damage. A commercial vehicle insurance policy won’t protect you however, if your employees drive their own vehicles for business purposes and don’t have adequate insurance coverage when they run into trouble.
Data Breach Insurance
One vital but often underappreciated type of business insurance is the type that protects your company when sensitive or personal data is lost, stolen, or otherwise exposed. Data breach insurance is particularly important when it comes to protecting private information stored on laptops, external drives, remote servers, or even in good old-fashioned paper files.
When your business employs others, it’s required by law that you protect all W2 employees with mandatory payments into the workers’ compensation program. If a member of your staff injures themselves while working, this type of insurance not only ensures that their medical expenses and wage replacement costs are covered, it also prevents them from being able to turn around and sue you or your company.
On a final note, don’t make the mistake of assuming that just because you run a small business from your home, that your home-based insurance has got your back in terms of property damage, or professional or general liability issues. When it comes to protecting both your family and your business, the recommendation to be better safe than sorry can never be overstated.