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Forms of Insurance Your Small Business Can't Overlook

John McMalcolm

July 15, 2013

Many small business owners overlook the importance of insurance when they are getting started. While they are trying to stay within their start-up budgets, they may decide to forgo insurance until their businesses are more stable and profitable.

Business insurance may be expensive, but it is a necessary investment. Many unexpected things can happen to your business that can potentially result in serious financial problems, and you need to have adequate insurance coverage to protect yourself against such misfortunes.

Here are several types of insurance that are essential for small businesses.

Liability Insurance

Liability insurance is a type of insurance that every business should have, including home-based businesses.

In the event that someone sustains bodily injury or property damage due to your company's negligence, you may be liable to pay compensation to him or her. Liability insurance enables you get reimbursement for this kind of loss.

Property Insurance

If you are the owner of your business premises or you have business property such as equipment, tools and inventory, you may want to purchase property insurance.

Property insurance provides protection against property damage or loss resulting from misfortunes such as fire, smoke, theft and vandalism.

Commercial Vehicle Insurance

Commercial vehicle insurance covers losses that are incurred when vehicles that are used for business purposes are damaged or totaled.

If your employees have to drive their own vehicles to carry out certain work-related activities, it is recommended that you obtain non-owned vehicle liability.

This type of insurance protects you against liability losses that are incurred if your employees are inadequately insured or uninsured.

Workers Compensation

Workers compensation is a very important form of insurance coverage for businesses.

It provides reimbursement for medical expenses and loss of income in the event that your employees are injured while working for your company. By offering workers comp, you can eliminate the risk of being sued by your employees over work-related injuries.

All states require employers who hire W2 employees to have workers comp coverage.

Professional Liability Insurance

If you have professionals such as lawyers, consultants, accountants, notaries, insurance agents or real estate agents working in your company, you should consider getting professional liability insurance.

Also known as errors and omission insurance, this type of insurance covers liability losses that occur because your employees fail to provide proper professional services.

Business Owner's Policy

If you are unsure of your business insurance needs, it may be a good idea to purchase a business owner's policy (BOP).

This insurance package includes several types of coverage that collectively provide comprehensive protection for your business, such as liability insurance, property insurance, vehicle coverage, business interruption insurance and crime insurance.

Getting a business owner's policy can help you save substantially on insurance, because it is cheaper than purchasing all the types of coverage separately.

Running a business involves risks, but some risks are just not worth taking.

Instead of having to worry about potential misfortunes that can happen, you can enjoy greater peace of mind by investing in a good business insurance policy.

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