Small business insurance coverage is a tricky subject for many new business owners. While there are certain industries where liability insurance is an absolute must – health care, for example – business owners in many other industries often question whether small business coverage is right for them.
For starters, many new business owners assume that if they structure their company as a Limited Liability Corporation (LLC) or similar legal entity, they're protected against many of the risks that insurance for small business is intended to cover. But, that protection is quite narrow. Not only that, but you may not recognize your legal vulnerabilities until it's too late. Daunting, right?
The good news is insurance providers like us here at AmVenture Insurance Agency, Inc. offer a wide variety of small business insurance options that allow you to tailor coverage to suit the needs of your business. Here's a rundown of the most common types of small business coverage, and when it's a good idea to consider them. While no one takes your business as serious as you, we have your back.
Small Business General Liability Insurance
Think of general liability insurance
as a security blanket that covers your business and any employees you may have. If your business is sued for damages that result from negligence, your policy protects you from covered losses, even for costs associated with defending against a lawsuit. General liability insurance can also cover against advertising injury, such as copyright infringement or libel.
This type of small business coverage is designed to protect your business from losses to your business assets, including equipment, furniture and real property. If you operate a home-based business, however, you should keep in mind that many standard homeowner's policies won't protect your business-related losses. In that event, you may need extra protection.
If your business is temporarily disrupted due to weather, cyber attack or other unforeseen hazards, business interruption insurance coverage – which can vary depending on the policy – is designed to replace your lost income and provides funds for temporary operations until your normal business is restored.
- If you determine these three types of protection make sense for your business, look for an insurance company that will bundle these coverages into a single business owner's policy, or BOP, which can typically be further customized for your business. You'll have the convenience of a single monthly premium, and you'll be keeping your small business insurance costs down at the same time.
Depending on the type of business you own, you may need additional coverage not included in a BOP
Commercial Auto Insurance
If you lease or purchase vehicles for use in your business, or if you have any commercial vehicles, you will need commercial auto insurance
to cover you against property damage and liability for accidents. Even if you have personal automobile insurance on a car you use for business, you may not be covered for damages that occur when you're engaged in business activities, so be sure to ask your agent.
With more and more business being conducted online, cyber threats and their ability to impact organizations and their customers are more pronounced than ever. Your cyber insurance
needs will vary depending on the type of business you're in, but if you maintain electronic records concerning your customers and/or employees, you may need cyber liability insurance. Cyber liability insurance may also protect you against costs associated with what can otherwise be a costly data-recovery effort.
Every state has its own worker's compensation
laws, but this type of coverage requirement usually kicks in once you have a minimum number of employees – typically three to five. Your worker's comp policy will cover employees’ medical expenses in case they are injured on the job, and it can also protect your business from further liability claims from employees.
Employment Practices Liability Insurance (EPLI)
If you have employees, you may want to consider EPLI
, which covers your business for employment-related claims such as discrimination, wrongful termination, harassment or retaliation. Although these policies are commonly used by larger corporations, we’re able to offer customized, affordable insurance for small business that guards against employee-related losses.
If you're not sure which small business insurance plans you need to help minimize your risks and grow your business with confidence, we can explain these products in detail and design a policy for your business. Reach out to us to learn more.
The opinions expressed here by AmVenture.com columnists are their own, not those of AmVenture.com.