Small Business Insurance Needs and How to Protect Yourself

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Small Business Insurance Needs and How to Protect Yourself

Your company’s assets, equipment, and well-being should be protected from damage and liabilities as a small business owner. You put hard work into building your business and making it a success, and now your small business has evolved into your livelihood. You, your family, and your employees all count on your company’s stability, and business insurance policies are here to help.

Considering Your Business’ Legal Obligations and Industry Risks
Business insurance is crucial in protecting all companies, large and small. Carrying a business insurance policy is highly recommended, but it is also required by law in most areas. Depending on the state that your business resides in, you could be legally obligated to provide workers’ compensation insurance for all your employees. However, every business needs liability insurance to protect them from the risk of property damage or bodily injury.

As a business owner, you need to be aware of the insurance risks involved in your industry. Knowing and anticipating any potential risks to yourself, your business, or your employees is of the utmost importance. Understanding these risks will also help you define what insurance policies are necessary for your business’ protection and which are not.

For instance, the owner of a restaurant would likely need product liability insurance in case someone fell ill after eating at their establishment and wanted to seek damages. Or in another scenario, business owners who work in finance should carry professional liability insurance in case a mistake is made on a client’s taxes or portfolios.

Evaluating the risks involved with your industry will not only save you considerable time and money but will also pinpoint what aspects need protecting.

Prioritizing Your Insurance Coverage and Considering Policy Pricing
No matter how successful your business is, your budget is always fresh in your mind and high on your priority list. While monitoring your company’s finances, you may think that insurance is an optional expense that perhaps can be skipped over. However, take a moment to consider the money and investments that would be protected through a vital business insurance policy.

Your insurance policies play a massive role in your company’s security and your financial future. Not carrying a business insurance policy is a risk that can cost you your livelihood after a single accident.

Since insurance is something that you are hoping never to need, it can be tempting to cut corners and purchase cheaper policies, especially if you are working with a tight budget. Still, “more affordable” policies will end up costing you substantially more when they cannot adequately cover your insurance needs after an incident.

Lackluster insurance coverage walks hand in hand with considerable affordability, which is why choosing the right policy for you is all the more crucial.

What Types of Business Insurance Should I Consider?
Whether your insurance needs revolve around your business’ liability, your workers’ compensation, or personal life insurance plans, considering your options before purchasing a policy is highly recommended.

General Business Liability
General liability insurance policies typically provide financial assistance when a small business owner is held responsible for personal injury or damaged property owned by clients or employees. This policy would cover a carpenter dropping a tool and damaging a client’s floor, or if an electrician installed wiring incorrectly and an injury occurred. If an issue arises where the reputation of your business is under threat, general liability insurance also assists in claims of libel or slander.

Without liability insurance, the costs of damages and injury would come directly out of your business, which can be financially devastating and challenging to recover from.

Business Property Insurance
Business and commercial property insurance protects your company’s physical location and property. If a fire broke out due to a mistake or accident, your business property insurance policy would cover the damage to both property and location. That includes financial compensation for any company tools, inventory, and equipment.

Business Income Insurance
Income insurance policies can assist in the event of lost income that was caused by fire, theft, or other types of damage. If a crucial piece of equipment is accidentally taken out of commission, that will affect your revenue and income.

Business income insurance policies exist for just this occasion. Not getting paid while you wait for your equipment to be repaired or replaced is not an option for every business owner.

Workers’ Compensation Insurance
Workers’ compensation policies offer monetary benefits for employees who have suffered a work-related injury, illness, or other ailments. If someone who works in manual labor dropped a heavy item on their foot, workers’ compensation insurance would help cover their medical care. If the injury continued to be debilitating, workers’ compensation would also cover disability benefits and loss of income while the employee recovers.

In an unfortunate, hypothetical situation, workers’ comp would also assist in funeral costs if an employee were to pass away due to a work-related incident.

Professional Liability Insurance
If your small business resides in the service industry, professional liability insurance or errors and omissions insurance may be something to consider seriously. This type of insurance covers your legal costs if a customer or client sues your company.

If, while providing a service, an employee was to make a critical mistake, professional liability insurance would be there to pick up the slack.

Cyber Insurance
Cyber insurance policies have seen a surge in popularity and necessity over the last 15 years. Countless businesses carry private information for their customers and clients. This information includes social security numbers, bank account numbers, emails, phone numbers, health records, and private addresses.

Hackers can access this information via your devices, network, or cloud. Any company is susceptible to cyberattacks, but your small business can be protected during that difficult time with cyber insurance. Cyber insurance will help compensate for the financial damages and legal fees that follow if this occurs.

Data Breach Insurance
Data Breach protection policies are similar to cyber insurance in that they also deal with the aftermath of cyber-attacks on your business. In the event that your business is the target of online hackers, data breach insurance policies will help inform the clients whose private information has been compromised.

Data breach insurance will also help you hire a public relations representative who can help you maintain your company’s standing after the cyber-attack. It is typical of data breach insurance to offer credit monitoring for clients who have had their information stolen.

Health Insurance
Health insurance is something most employers are required by law to offer to any full-time employee. However, quality health insurance benefits are an excellent way to set yourself apart when it comes to new employees. In today’s economic climate, employees are in high demand. Potential hires are more likely to choose you over your competitors if you offer better benefits for your workers.

Health insurance also comes in many shapes and sizes rather than one-size-fits-all. You should consider choosing a health plan that offers multi-tier options for your employees, therefore allowing them to customize their own coverage and price. The options for health insurance coverage are far-reaching, with policies coming from a variety of companies with different benefits.

With so many policies to choose from, you will surely be able to find the ideal health insurance to purchase.

Life Insurance
Another popular type of insurance policy among business owners is Life insurance. Life insurance policies offer financial security and protection to your loved ones if you pass away. Your loss of income can have disastrous consequences for those financially supported by you and your business. Life insurance policies vary in price and payout, making policies that are affordable to a wide range of people.

Life insurance benefits will help cover your funeral expenses, your debts, and your financial responsibilities to your dependents. If you have no children or spouse, you can leave your life insurance benefits to a business partner or trusted friend. Choosing someone you trust and who will respect your wishes is imperative. If you still are looking for more options when choosing your life insurance beneficiary, consider making a charitable donation to a cause that means a lot to you.

It should be noted leaving your estate as a beneficiary is also an option, but keep in mind that the money will be used to pay off all your debts before being made available to anyone in charge of the estate. Whereas if you were to leave your life insurance payout to a family member, they alone would be in charge of how the money is spent.

Final Thoughts
Business insurance is something that all business owners should carry. These types of insurance policies are crafted to protect and support your business, assets, and financial future. Their price ranges vary widely but keep in mind that with a lower price point comes a lower quality of coverage. Your business is your livelihood, and its protection against liability and damages is a top priority.

To learn more about small business insurance, contact the experts at NASE. Our licensed professionals will be happy to answer any questions you have.

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Courtesy of NASE.org
https://www.nase.org/about-us/media-relations/nase-in-the-news/2022/09/27/small-business-insurance-needs-and-how-to-protect-yourself