Business insurance provides essential protection for any company against costly damages or lawsuits, providing peace of mind for both employees and owners alike. While most small businesses only require general liability and business owner’s policies, others may need specific coverage depending on their structure or industry.
Some examples include product liability coverage that protects against bodily injury claims caused by products you sell and directors and officers (D&O) insurance, which protects the assets of those in management positions.
General Liability
Business insurance provides financial protection from unexpected risks such as natural disasters, data theft and lawsuits. While certain policies are required by state laws, others may be optional depending on your company’s type of risk profile. Because every business carries different levels of liability exposure, you’ll need to assess what policy will best meet your needs and select an individual policy with coverage limits that meet them – purchasing multiple policies at once can both lower costs and simplify administration while providing more comprehensive coverage options.
Small businesses of every type require general liability insurance to safeguard themselves against claims of property damage or bodily injury caused by normal operations of their business, including repair costs if employees accidentally damage customer’s property away from your office, medical expenses for customers injured on company property and repair costs for damage done while working onsite at your office location. Many policyholders also opt to add product liability protection as an extra layer of defense should someone be hurt due to your products.
Consider investing in non-owned and hired auto coverage, which protects against liability should your employees use personal vehicles or rental cars while conducting company business. Professional liability may also provide vital protection, safeguarding directors and officers of limited liability companies (LLCs) against financial loss from business-related lawsuits; it’s often required for service businesses but can be packaged together for greater savings.
Your business’s liability risk can change over time, so it is wise to regularly reassess and revaluate its coverage requirements. A broker or agent can help create a risk profile and determine what policies best suit your company as well as any coverage limits needed for purchase.
Business Owner’s Policy (BOP)
Business Owner Policies combine general liability and commercial property coverage into one policy, targeting businesses with under 100 employees and annual revenues of $5 million or less that operate away from the owner’s residence. While they may be available to some companies (for instance jewelry stores or bars) this option may not always be appropriate as high-risk businesses may require customized coverage policies to fit their unique risks.
BOP policies cover business interruption insurance, which compensates businesses for lost income and extra expenses when disaster disrupts normal operations. They can also cover damage to their buildings or personal property – such as inventory – which typically have fixed limits in terms of total payout amounts over the year.
BOPs also contain business owner’s liability coverage that is similar to that found in standard commercial general liability policies; however, these typically exclude employee-related lawsuits and workers’ compensation claims. A BOP can be tailored specifically for any insured’s or insurer’s specific needs with standard endorsements such as accounts receivable protection – for instance if selling products to the public you might require this for protection of customer credit card data in case of data breaches or fire that destroys records.
Cost considerations when purchasing a BOP depend heavily on a company’s coverage needs, industry and claims history, physical premises location and size – such as asset size. As such, larger firms with more assets typically pay more. Coverage limits also impact cost; on average small businesses typically purchase policies with $1 million/$2 million limits but some providers provide higher coverage limits.
Business Interruption
Business interruption coverage, also known as extra expense insurance, provides compensation to your company when an unforeseen physical damage event forces it to temporarily close down temporarily. It covers relocation expenses as well as paying employees during this period; exactly how much compensation will depend upon how long your business had been operating prior to an incident occurring and financial records maintained prior to it happening. Typically this coverage comes included as part of commercial property or business owners policy (BOP) insurance plans.
An unexpected fire, natural disaster or burst pipe could force your small business to close for repairs, leaving no profits during that period and taking months or years before it would reopen again. Having adequate small business insurance in place can help make life easier during hard times by covering day-to-day operating costs such as rent or relocation expenses.
Business interruption insurance can be purchased as part of your BOP or as standalone coverage with other add-ons such as cyber and employment practices liability coverage. In order to qualify, however, this policy requires having a physical location; unfortunately it’s not available everywhere.
Minimum coverage requirements include 72 hours to qualify, with payouts only covering losses that result directly from physical damage such as theft, fire and wind. COVID-19 closure revenue loss protection can be added via additional policy riders; so it’s essential that you evaluate your needs regularly so your policies provide adequate coverage.
Property Insurance
There are countless potential pitfalls involved with running a business, and having sufficient insurance coverage can protect both financial catastrophe and all the hard work put in by you and your staff. Furthermore, knowing your business is safe will allow you to sleep easier at night knowing it will remain solvent.
Property insurance provides protection for a range of items, such as furniture, inventory, equipment and electronics. It usually covers repair/replace costs as well as business interruption costs; thus making this coverage essential for businesses of any kind. Working with an experienced insurance agent specializing in commercial business policies will give invaluable insight into your risks and needs as quickly as possible and lead to the right policy options faster.
Automobile insurance is another essential element of property coverage, offering coverage for business-owned vehicles as well as any liabilities associated with employees using personal cars for work-related trips. Furthermore, some policies even cover rental car expenses incurred by an employee using his/her personal car for work-related trips.
At every point in time, it is critical for businesses to assess and reassess their insurance needs on an ongoing basis. As your business evolves and changes, so does its risks and liabilities. Consult your broker about any recent purchases of equipment or expansion of business activities which might impact coverage needs; also discuss savings through comparing policies or deductibles; they can even assist in creating disaster plans as necessary.
Employee Dishonesty
Employee dishonesty is one of the main factors behind business failure; one out of three bankruptcies are attributable to employee theft alone. While preventative measures may help reduce this risk, having insurance coverage in place when something bad does happen can provide protection for your company when needed. Two types of protection policies available under crime/employee dishonesty umbrella policies exist: one is an independent policy protecting against money and property stolen by employees while fidelity bonds protect clients of your company when affected by employees engaging in dishonest acts while another provides protection from employee theft at your business when clients of their businesses become affected due to actions of employees working there.
Standalone policies typically provide up to $1 million of coverage against theft of money, securities, property and forgery/alteration/unauthorized electronic funds transfers/wire fraud/credit card fraud/counterfeiting fraud etc. They can cover current and former employees as well as volunteers/independent contractors/directors as well as customer premises coverage that provides compensation when their property is lost while it’s under your care and control; an endorsement can also provide ERISA bond coverage within one policy.
Fidelity bonds are an employee dishonesty coverage requirement for some fiduciaries, including those managing pensions or Employee Retirement Income Security Act (ERISA) plans. You can add this coverage to your BOP or purchase separately; depending on the needs and size of the company it may extend up to $100 million!
