Types of Business Insurance: What Do You Need?
Navigating the requirements and information you need when starting a new business can be a daunting task. When juggling responsibilities like hiring staff or filing for permits, acquiring insurance can sometimes be put on the back burner for later.
The reality, however, is that business coverage is a crucial part of ensuring your new company can be resilient in the face of obstacles, especially in its early stages. With so many types of insurance available for your business, how do you know which is the best fit for your company? Here’s a look at some insurance options to consider.
What kind of business insurance is right for my company?
To begin your search for adequate business insurance coverage, start by assessing the level of risk for your enterprise. Examine your requirements based on at least two different dimensions: the nature of your industry and the scope of your administrative or back-office functions.
Understand the risks associated with your industry
No two businesses are the same. For example, a company that offers amateur scuba diving tours will need very different coverage compared to a small firm that specializes in outsourced marketing services.
Often, different industries will entail more or less risk and require comparable liability coverage. Experienced agents and specialized plan terms may be required for purchasing sufficient policies to protect companies that operate in riskier industries.
What kinds of business insurance are required by law?
According to the US Small Business Administration (SBA), if you have employees, you must have the following types of insurance:
- Workers’ compensation
The SBA also notes that additional business insurance requirements can differ from one state to the next.
Common types of business insurance
Based on your risk level and specific needs, there’s a wide variety of coverage options that could constitute your overall business insurance policies. These plans are in addition to the legally required categories we’ve already mentioned.
Liability coverage safeguards your business if, while conducting business operations, the company contributes to property damage or injury to another party.
There are several different kinds of liability protection, including:
- Commercial general liability: According to the Insurance Information Institute (III) , this kind of protection covers a business for medical and legal expenses or other damages incurred due to a variety of actions for which it was deemed that the business was at fault. However, these actions must be largely incidental to the core functions of the business.
- Product liability: The SBA describes this kind of protection as applying to businesses that create, distribute or sell products. In the event that a defective item causes harm to a customer, this policy will cover associated expenses.
- Professional liability: Unlike general liability protection, professional liability is used to cover claims that are filed against a business or individual alleging negligence or malpractice during business. Medical malpractice insurance is one example.
Covering company vehicles
Personal auto insurance likely won’t cover incidents that occur while operating a vehicle for business purposes. You’ll probably need commercial auto insurance if your business has a fleet of vehicles or even a single company car. Small business owners should also work with insurance agents to determine if they need commercial auto insurance for their personal vehicles based on how they’re used.
Commercial property coverage
While liability coverage protects your business, commercial property insurance provides protection against loss of physical assets. If your business is in a designated flood-zone, you may need a separate flood coverage policy.
Home business insurance
Another category of coverage outlined by the SBA applies to small business owners who manage operations from their primary residence. Special policies can provide extra protection for business assets and general liability coverage that wouldn’t normally be handled by a homeowners policy. This kind of plan might also be available at rates that are more affordable than other full-fledged business insurance options.
Cybersecurity is a growing issue, and small businesses are not immune from being a target. Despite that, very few businesses have coverage protecting against it. Cyber insurance can help your enterprise recover if you experience a data breach or other attack.
Find the coverage you need today
By working with the professionals at FBBINSURANCE, you can find budget-friendly coverage options to help protect your business. Our Business Insurance Consultants will focus on your unique situation and offer strategies best suited for your needs. Contact an FBBINSURANCE associate today to learn more.