What Insurance Do You Need for a Small Business?
Most small businesses will need a business owner’s policy (BOP). A BOP combines business property, business liability and business income insurance in one policy. Business property, sometimes called commercial property, helps protect the physical location of your business and business assets. This includes tools, documents, and furniture.
Business liability, sometimes called “commercial liability,” helps cover the costs of liability claims made against your business. For example, if a customer were to trip and injure himself on your business property, he could bring a lawsuit against your company. Business liability insurance can help cover the costs of that claim.
Business income insurance helps replace lost income when your business can’t operate due to a covered loss. This is a great way to help ensure you can keep paying your bills, payroll, and ride out the temporary suspension of your business. For example, let’s say a fire damages your business and it’s closed during repairs. Business income insurance can help replace the lost income while repairs are being made.
There are also several instances where certain states require business insurance coverage. In most states, businesses with employees need:
- Workers’ compensation insurance
- Unemployment insurance
- Disability insurance
Workers’ compensation provides financial support to employees who are unable to work because of a job-related injury or illness. For example, if an employee injures their back while lifting a heavy piece of equipment, workers’ compensation insurance can help cover their medical costs.
Unemployment insurance provides benefits to workers who are displaced from their jobs through no fault of their own.
Is Business Insurance Required?
As a business owner, you may be asking yourself, “Is business insurance required?” The short answer is no. There are many types of business insurance options. They are available to business owners in the event of a catastrophic natural disaster or when faced with a claim or lawsuit against the business or other employees.
In almost every state a certain amount of insurance must be held for employees operating under your business, such as workers’ compensation insurance. Covered risks under a business insurance policy include theft, injured workers’ lost wages, and more. If your business does not have a business insurance policy, the costs may come out of pocket. In some cases, this can completely ruin your business if you do not have the finances.
So, what are the small business insurance requirements in your state? If you have employees, most states require you to have workers compensation and unemployment insurance. Depending on where your business is, you may need disability insurance. Business insurance is a tool for business owners to cover themselves and their assets in case of an unforeseen event.
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Landscaping and arborists should look into buying Business Income Extension for Off-Premises Operations. This coverage can help replace income lost if your business can’t operate because equipment was damaged at the job site. Landscapers might also consider adding Herbicide/Pesticide Insurance coverage. This can help cover costs resulting from pollution caused by using pesticide or herbicide.
Real estate businesses will most likely need commercial auto insurance. This coverage can help cover the costs if an employee causes an accident while driving for work. Real estate agencies can also benefit from employment practices liability (TPI) and employee benefits liability (TPI) insurance.
If an employee makes a claim of wrong termination, discrimination, harassment or other employment related issue, TPI can help cover the costs related to that claim.
The peoples insurance helps cover the costs related to claims that your company committed errors or omissions in the administration of your employee benefits plan.
Insurance Needs for Retail Businesses
Retail businesses can benefit from adding Business Income from Dependent Properties and Franchise Upgrade coverage. Business Income from Dependent Properties helps cover lost business if a third party your business depends on causes your store to lose business. For example, you may lose business if a manufacturer of goods you sell unexpectedly shuts down and is unable to deliver the items you ordered. Depending on the reason for shutdown, this type of Business Income Dependent Properties coverage can help cover the income you lost as a result.
Franchise Upgrade coverage can help pay the costs to upgrade a retail store to meet franchise standards after a covered accident.
Restaurants and other food service businesses can help protect themselves by adding Liquor Liability and Temperature Change insurance. Restaurants that serve liquor are at an increased risk. If a patron who was served alcohol causes a fight or accident, the restaurant could be held liable. Liquor Liability helps cover the costs of a claim involving the sale of liquor at a restaurant. Temperature Change coverage helps protect restaurants if refrigerator units break down and cause spoilage. If this happens, Temperature Change coverage can help pay for the cost to replace the stock.
There is a wide variety of business insurance coverages available to business owners, so they can tailor their insurance protection to address the specific risks facing their business. When choosing coverages for your business, think about the important aspects of your operation that need protection. These could include:
- The type of work you do
- Your physical premises
- Property and equipment
- Intellectual property
- Employees and customers
Keep in mind that as your business grows, your coverage needs may change.
Also consider that businesses in different industries need specific business insurance coverages to help meet their unique needs.
