Every business faces risks that could put it out of commission, so having adequate business insurance policies in place is invaluable. Small businesses should prioritize general liability policies as the cornerstone of their protection to guard against accidents that might occur while in operation. Other essential coverages include commercial auto and workers’ compensation.
1. Business Owner’s Policy (BOP)
BOPs combine general liability and commercial property coverage into one policy at an often reduced cost—often required by landlords when renting commercial space and the most prevalent form of small business insurance coverage. General liability coverage will help shield you from costly lawsuits stemming from third-party injuries or damage to company property, while property coverage pays to repair or replace equipment, inventory, and buildings damaged by natural events like fire. An experienced insurance advisor can help you assess your unique risks and find a BOP that meets them, while also suggesting add-ons such as cyber liability insurance or workers’ comp.
2. General Liability
At any business, general liability insurance (sometimes known as commercial general liability, CGL, for short) provides vital protection from third-party claims of bodily injury or property damage due to work-related incidents that happen on company property, such as customers slipping on wet floors in retail stores or lawnmowers accidentally damaging an outdoor sculpture while providing landscaping services at client locations. Some businesses can benefit from an expanded version of this policy that covers products and completed operations, providing protection from liability claims that could arise after sales or projects have concluded. It also covers possible reputational harm from libel or slander attacks, potentially saving their business valuable resources.
3. Commercial Auto
If your business relies on vehicles for deliveries, transport of materials,, or meeting clients, a commercial auto policy can protect against collision damages as well as non-collision events such as theft, fire, and vandalism. Personal auto policies do not typically cover incidents occurring while driving for business purposes, so business owners should carefully consider additional coverage such as hired and non-owned auto coverage (also called auto lease gap insurance) and blanket additional insured/auto hirer physical damage coverages such as those offered by newer companies like NEXT Insurance that offer tailored affordable policies specifically for small businesses.
4. Business Interruption
Business interruption insurance provides coverage against the financial losses resulting from an event that damages your business, such as operating expenses, payroll costs, and rent payments. It typically forms part of a commercial property policy rider. Coverage begins when physical damage occurs and ends when its restoration can reasonably restore normal operation, known as the “restoration period.” Finding out how much BI coverage your small business requires may differ depending on its gross earnings and projections, as well as taxes or loan payments that remain due even after an extended closure of your operations.
5. Workers’ Compensation
Most states mandate employers carry workers’ compensation insurance for employees that provides medical and lost wage benefits should an injury occur on the jobsite. At eHealth, professionals can assist your business in meeting its state-mandated workers’ comp requirements while finding you the optimal value plan for your needs. One claim can devastate a small business, and workers’ compensation insurance is the ideal way to mitigate this risk and protect employers from third-party claims and lawsuits. Workers’ comp coverage may also provide employers with legal protection from third parties bringing third-party claims or lawsuits against them. Although workers’ comp can often be included within an umbrella policy (BOP), individual policies often contain different terms when it comes to their details—it may even be available as standalone policies.
6. Commercial Property
Businesses face numerous risks every day that threaten property damage, legal liability claims, and loss of income—these risks can be costly to address without adequate protection—therefore, insurance is crucial to helping mitigate such threats. Small businesses need various forms of insurance coverage to meet their business needs. Some providers provide bundle policies that combine key coverages such as property, liability, and business income insurance into one policy, while others provide tailored policies to meet specific requirements. Selecting an insurer requires understanding each option’s policy details, claims reporting process, and premium costs before selecting those best suited for your business through an independent broker.
7. Business Excess Liability
Small business owners can purchase various policies to safeguard their venture. These include business interruption insurance, which provides reimbursements in case an unexpected disaster prevents operations from continuing as normal, and professional liability (also referred to as errors and omissions insurance) policies, which cover potential client lawsuits over unsatisfactory work performed by employees.
Extra liability coverage acts as a stopgap when primary policies’ maximum limits have been exhausted, helping businesses prevent catastrophic losses caused by seven-figure liability settlements and remaining solvent. It can especially help high-risk enterprises that operate in high-risk environments or those required by clients to carry higher limits.
8. Commercial Crime
Commercial crime policies provide businesses with protection from financial losses caused by criminal acts, such as theft and fraud. Policies may either be purchased separately or as part of an overall business protection strategy (BOP). It may also cover professional liability for advice-giving or service-provision businesses against claims of negligence from customers or clients.
Remembering that no organization is immune from theft and fraud by employees or third parties can help your organization reduce losses by closely observing cash transactions and verifying receipts and deposits match accounting records. Furthermore, restricting access to sensitive data as well as conducting background checks are additional risk-mitigation strategies that should be employed.
9. Commercial Umbrella
A commercial umbrella policy (or excess liability insurance) provides extra protection to your company in the form of claims that exceed its primary policies’ maximum limits, such as in restaurants or retail stores that interact directly with their customers/clients in person; construction firms that utilize risky machinery; property management firms that deal with clients directly; and those that interact directly with clients, like property management.
It can be especially beneficial to those companies dealing directly with customers/clients, such as restaurants or retail stores, or who rely heavily on dangerous machinery, including restauranteurs, retail stores that engage directly with their clients, and construction firms/property management companies, as these can potentially increase claims/damages that exceed primary policies’ maximum limit, protecting companies like restaurants/retail stores/construction firms/property management firms that interact directly with clients/customers directly, construction firms/property management companies, and others.
Assessing your business’s insurance needs is an important decision, and professional assistance can make the process simpler. When calculating coverage amounts, keep your business size, industry risks, risk tolerance, and coverage amount in mind. Reach out to us now for expert guidance in choosing an umbrella policy tailored specifically for small businesses.
