Have you thought about the types of insurance coverages you’ll need to protect your small business? If your business is like many others, you may need policies to protect your employees, your site, and your customers’ critical information.
Your insurance needs will depend on a number of factors, including whether you work from home or offsite, whether you store personal customer data, and whether you employ others in addition to yourself. It’s important to note that, while most small businesses need some or all of the types of insurance we cover in this article, you’ll need to speak with a commercial insurance provider for specific guidance for your small business.
What are some of the policies I might need?
Commercial general liability (CGL) insurance
This form of business liability insurance is essential for small business owners. It can protect you from claims that occur through the ordinary course of business operations, which may include property damage, injury, and claims of stolen ideas, invasions of privacy, slander, or copyright infringement against you or your employees.
When to purchase it: Before developing products or beginning operations
Errors & omissions (E&O) insurance
Sometimes called professional liability insurance, E&O insurance covers professionals who may be sued for inadequate work, negligence, or advice they give clients that results in financial loss. Most often, coverage is used to cover legal defense costs.
When to purchase it: Before beginning operations in which you advise, consult, or offer support to your clients
This form of insurance is specific to businesses staffed by medical, health, and wellness professionals. It can protect against claims of negligence, cover legal costs, and provide an allowance to rebuild your professional reputation.
When to purchase it: Before meeting with clients or offering verbal, written, or electronic advice
Workers' compensation insurance
Businesses rely on workers’ compensation insurance to cover the costs relating to on-the-job injuries. Often, these costs include lost wages, medical expenses, and rehabilitation. Every state has workers’ compensation laws, and most require every state-registered employer to possess this form of insurance to cover their injured employees.
When to purchase it: When you hire your first employee
Commercial property insurance protects your business’s site from disaster, theft, and vandalism. Often, coverage includes the repairs or replacement values for the land, landscape, structures, and contents of buildings located on the insured property. Property insurance for commercial leases may be limited to the contents of the leased unit.
When to purchase it: When you buy a property or sign a commercial lease
Commercial auto insurance
Auto insurance is necessary for any business that owns or leases vehicles or requires its employees to use their personal vehicles for job-related tasks, including transporting goods, employees, or customers. Some carriers also offer a form of rideshare or on-demand insurance that can provide additional coverage.
When to purchase it: When you buy or lease a vehicle or plan to use a personal vehicle for commercial purposes
Employment practices liability insurance (EPLI)
EPLI protects against claims between employers and employees, usually relating to discrimination, harassment, defamation, misrepresentation, or invasion of privacy in the job search, hiring, performance reviews, or termination. Many insurance and legal experts also recommend extended coverages that afford protection from complaints made by third parties.
When to purchase it: When you begin searching for employees
Cyber (data breach) liability insurance
This form of insurance can protect your business and its employees in three ways. First, it can help you guard against claims of inadequate protection of sensitive, personal, or private data. Second, it can protect your business through computer-related attacks, which may include phishing, malware, ransomware. And finally, it can afford you coverage when physical pieces of technology that provide access to confidential information are stolen.
When to purchase it: When establishing database systems, setting up software, storing private information, or using email or other platforms for your small business
Directors and officers (D&O) insurance
D&O insurance protects the personal assets of a business’s directors and officers and their spouses through claims of actual or alleged wrongdoings. These may be related to breaches of contract, breaches of fiduciary duty, misuses of funds, fraud, thefts of intellectual property, poaching customers, mismanagement, or failures to comply with laws and regulations.
When to purchase it: Most often, it’s needed when you appoint others to represent or speak on behalf of your business
Key person insurance (formerly known as key man insurance)
This form of insurance serves as a life insurance policy for executives and essential employees whose death would cause financial or reputational hardship for the business. Often, the business pays for the policy and serves as the beneficiary.
When to purchase it: When the death of any one person affiliated with your business would have detrimental effects on the business’s long-term performance
|The specific policies and coverages you select will depend on your business’s unique needs. Be sure to speak with a commercial insurance provider who can help you assess your coverage needs and select policies that safeguard your business.|
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