A life preserver floats in water, representing the importance of the protection afforded through small business insurance

Small Business Basics: Insurance

Have you thought about the types of insurance your business will need? If you haven't, take time right now to think about what you need to protect. For most, this will include your employees, site, and customers’ critical data.

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. Many find they need some or all of the types of insurance we cover in this article. But before you purchase any policy, speak with a commercial insurance provider who can give you specific guidance.

 

What are some of the policies I might need?

Commercial general liability (CGL) insurance

CGL is a must for small business owners. It can protect you from “claims that occur through the ordinary course of business operations.” These might 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 you create products or begin work.

 

Errors & omissions (E&O)

E&O is sometimes called professional liability insurance. It can help if you're sued for inadequate work, negligence, or advice you give clients that results in financial loss. Often, coverage is used to cover legal defense costs.

When to purchase it: Before you advise, consult, or offer support to your clients.

 

Medical malpractice

Medical, health, and wellness pros must have this insurance to guard against claims of negligence, cover legal costs, and access an allowance to rebuild their reputation.

When to purchase it: Before you meet with clients or offer verbal, written, or electronic advice.

 

Workers' compensation

Workers’ comp can cover the costs relating to on-the-job injuries. Often, these costs include lost wages, medical expenses, and rehabilitation.

Every state has workers’ comp laws. Most require every state-registered employer to hold this form of insurance.

When to purchase it: When you hire your first employee.

 

Property

Commercial property insurance helps you recover costs related to disaster, theft, and vandalism at your site. Often, coverage includes the repair or replacement values for the land, landscape, structures, and also the contents of buildings located on the insured site.

This insurance isn't just for people who own buildings or land. You'll also need it if you have a commercial lease. Here, coverage may be limited to the contents of your leased unit.

When to purchase it: When you buy a property or sign a commercial lease.

 

Commercial auto

Does your business own or lease vehicles? If so, you'll need a commercial auto insurance policy. It's also a must when you have employees who use their own vehicles for job tasks. These might include transporting goods, team members, or customers. Some carriers also offer a form of rideshare or on-demand insurance that can provide the right forms of coverage.

When to purchase it: When you buy or lease a vehicle or plan to use a personal vehicle for business purposes.

 

Employment practices liability insurance (EPLI)

EPLI is important. It protects against employment claims of discrimination, harassment, defamation, misrepresentation, or invasion of privacy. You can also buy extended coverages to protect against third-party complaints.

When to purchase it: When you begin building your team.

 

Cyber (data breach) liability

This form of insurance can protect your business in three ways. First, it can help guard against claims that sensitive, personal, or private data stored at your site is inadequately protected. Second, it can protect your business through computer-related attacks such as phishing, malware, and ransomware. And third, it offers coverage when physical pieces of technology that can access confidential information are stolen.

When to purchase it: When you build database systems, set up software, store private information, or use email or other platforms for your business.

 

Directors and officers (D&O)

D&O protects the assets of a business’s directors and officers and their spouses through claims of actual or alleged wrongdoings. What might this look like? Often, it's a breach of contract, breach of fiduciary duty, misuse of funds, fraud, theft of intellectual property, poaching customers, mismanagement, or a failure to comply with laws.

When to purchase it: Most often, it’s needed when you appoint others to represent or speak on behalf of your business.

 

Key person

This form of insurance serves as a life insurance policy for people 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 a person would have detrimental effects on the long-term health of the business.

The specific policies and coverages you choose will depend on your business’s unique needs. Need help working through them? Talk with a commercial insurance agent who can help you assess your needs and find policies that will protect your business.

Would you like to check out some online insurance firms? Take a look at these three options:

 

Want a free step-by-step guide to starting and growing your business? Log into your owner’s portal.

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