5 Types of Insurance Every Small Business Owner Should Own

Karleia Steiner

November 10, 2014

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Small businesses can face several types of challenges during operation. The standard liability for most businesses fall under liability and protection for employees. Home-based business and commercial operations can have similar liability requirements with a different scope. The following types of insurance should be in every small business owner's portfolio of protection.

Liability Insurance

Liability insurance comes in several flavors. General liability insurance is the standard product used for any incidents that may require protection against lawsuits and judgments requiring an appeal. Examples include libel or property damage. Professional liability insurance is another option that should be considered. This policy covers businesses against professional errors and negligence. Private medical practices use this to protect against medical malpractice. Professional services such as tax services can purchase this professional insurance to protect against lawsuits.

Many standard business insurance policies can be placed under an umbrella known as a Business Owners Policy (BOP). Companies such as Underwriters Insurance Brokers (BC) Ltd often recommend considering a BOP plan to include a variety of insurance liability policies to protect every area of the business operation.

Personal Life Insurance

A personal life insurance policy can protect assets and business property in the event that a business will be passed on to someone else. A life insurance policy can also provide extra assurance for a partner or spouse to transfer the operation as smoothly as possible. Income replacement is an important aspect of continuing a business operation.

Worker's Compensation

Injuries in the workplace can occur regardless of the type of business. Worker's compensation is absolutely necessary even if there is only one employee. It provides wage replacement and specific payments for medical costs if an injury occurs in the workplace. This relieves the business owner from potential lawsuits or liability in the event of an accident.

Homeowner's or Renter's Insurance

A small business will always have a physical address of some kind. An insurance policy should be in place even if you're renting. This protects business asset replacement costs in case of fire or flood. It also protects compensation in the event of a burglary. A homeowner's insurance policy may not cover a home-based business. However, many insurers can offer a business endorsement to cover computer equipment and supplies when necessary. A homeowner's policy will also prevent the cost of replacement value affecting the cost of running the business.

Property Insurance

Property insurance is a necessary asset for commercial businesses. Most property insurance policies cover the following:

• Building property
• Outdoor signs and landscaping
• Inventory and equipment

Property insurance differs from other policies in the amount of aggregate coverage available. It can often allow for a considerable amount of commercial property coverage.