Nobody likes to plan for an accident or similar misfortune. Nevertheless, if you are a small business owner, you will want to make sure you have the right insurance coverage for your business if something does happen. In some cases, you may be required by law or a licensing agency to carry certain types of insurance.
This article covers some of the most common types of business insurance available to business owners. Carefully evaluate your risks and consult with a reputable insurance broker to make sure you have the coverage you need for your small business.
Business Owners Package (BOP). Many insurance companies offer a basic business owner’s insurance package, commonly referred to as a BOP. A BOP has all the different types of insurance coverage a business owner needs packaged into one bundle. Typically, a BOP includes general liability insurance, property insurance, vehicle insurance, business interruption insurance, and any other desired coverage. It is often less expensive to obtain insurance this way as opposed to buying separate insurance policies for each type of coverage.
General Liability Insurance. General liability insurance is probably the most important type of insurance for any business owner. It protects you from claims for accidents that happen on your business property, like the classic slip and fall injury. It also protects you from claims for damage you cause to another person’s property, like a glass of water you spill onto your client’s expensive computer while visiting his or her office. You should especially consider this type of insurance if people regularly frequent your place of business or you regularly frequent other people’s place of business as part of your work.
Property Insurance. Commercial property insurance protects your business property, including your office equipment and supplies, when disaster strikes. It covers everything from computers and furniture to the building itself. It also covers business interruption and lost income if your business stops operations due to a disaster. Examples of disastrous events that may be covered include fire, flood, vandalism, and theft. There are two basic types of commercial property insurance policies: all-risk and peril-specific. A peril-specific policy covers damage to your property caused by a specific event, like an earthquake. The all-risk covers any type of disaster as stated in the policy. Be sure to discuss the particulars of your policy with your insurance agent or broker to make certain you have all of the property coverage your business needs.
Vehicle Insurance. If your business uses a vehicle for business purposes, you will likely be required by state law to purchase commercial auto insurance. This type of insurance protects you when your business vehicle is involved in an accident. Coverage may include protection for bodily injury, medical expenses, and property damage and will extend to you and any third-party involved in the accident. Many insurance companies will allow you to customize your commercial auto insurance policy to ensure the coverage you purchase is suitable for your business needs.
Product Liability Insurance. If you sell or manufacture a product, you may want to purchase product liability insurance coverage. This insurance helps protect you from personal injury and property damage claims resulting from a defect in the product you sell or manufacture. Whether you need this coverage and how much you need will depend on the type of business you have. For example, someone in the business of selling cars will need more product liability insurance coverage than someone who sells jewelry.
Professional Liability Insurance. Some professionals, like insurance agents, contractors, accountants, attorneys, dentists and doctors, are required by state law to carry professional liability insurance. This type of insurance is also sometimes called errors and omissions or malpractice insurance. Professional liability insurance is designed to protect you if your client sues you for negligence or for giving bad advice. Your personal liability insurance will cover some of the costs of defending against these types of claims in a lawsuit and also the monetary damages that result from the lawsuit.
If you have employees, you will need additional insurance, including workers’ compensation, unemployment insurance, and state disability insurance.