If you own a small business you know that with all of the rewards that come with being an entrepreneur there are also financial and legal risks that act as a daily overhang on your business. If one of your employees is injured on the job, the medical costs could bankrupt your business. If somebody slips on the ice in your parking lot or gets sick from the food you serve, your business and your personal financial health could be at risk.
For these reasons, and many more, there exists a variety of insurance solutions for the small business owner. Some of these are required by law while others are required in order to protect yourself and your family from catastrophic financial loss. Here are the top four must have small business insurance policies. Even if you have one or more of the following insurance policies, make sure you regularly get free quotes to ensure you are getting the best deal on your business insurance.
Nearly all of us have some sort of general liability insurance in our personal lives. If you drive a car, you are probably required by law to hold general liability which covers you in the event that something happens where you are liable to pay damages to somebody. In your automobile, if you run in to the back of another person’s vehicle, your general liability may cover the costs.
If you have homeowner’s insurance, you may have liability coverage that covers any injuries that occur while somebody is on your property. One example may be if the family dog bites somebody while they are visiting. Not only does homeowner’s insurance cover you if somebody else is harmed, it also covers financial loss to your own property.
A general liability policy for your business acts in the same way. It not only protects you against the financial loss if somebody is injured while on your business property but it also provides relief if a catastrophic event happens to your business. These may include a fire, weather damage, theft, or loss of revenue due to these events and a multitude of other events.
Workers compensation is required by law in all states if you employ people on a full or part time basis. When people work, accidents occur. Regardless of the type of job they are performing, the risk of an injury is always a reality and depending on the injury, the costs to you could reach the millions if you didn’t have workers compensation insurance.
This type of insurance covers all types of injuries sustained while working for you, including physical and mental injuries. Your liability without this insurance would include all medical care and loss of income due to the injury. Workers compensation insurance also pays a death benefit to the employee’s beneficiary should the employee sustain a fatal injury while on the job.
If your business has a fleet of vehicles in order to carry out the activities of the business, those must be insured as well. This type of insurance isn’t dissimilar to your personal auto insurance in that it covers the vehicle against damage, any damage caused to other people’s property as a result of your commercial vehicle, injuries to others as a result of the actions of the vehicle and certain acts of God including hail storms.
All insurance policies have certain maximums which allow the insurance company to not pay expenses once the maximum amount is exceeded. Some claims can quickly deplete the maximum amount of a certain part of your insurance policies. For this reason, an umbrella policy can be purchased to cover the costs over and above the maximums on your basic policies.
Additionally, an umbrella policy often covers certain situations that aren’t covered in your other policies. One example could be damage from a flood and other catastrophic events. If your business performs services that are considered high risk, you may need an umbrella policy.
No business owner wants to purchase insurance but even more than individuals, business owners take on much more liability and are often require by law to hold current policies.
This article was updated on December 10