Launching a small business takes a lot of tenacity, but it can pay off in the form of greater independence, flexibility and the ability to build generational wealth.
However, becoming your own boss also comes with risks. Small businesses may face a range of incidents that could impact their resilience and longevity, including property damage, theft and even lawsuits. That’s why, as an owner, you should consider the risks associated with your particular business, as well as the types of business owner insurance that could help you safeguard what you’ve worked so hard to build.
Property damage or loss
Without your physical assets—including the place you do business and your equipment and inventory—your business doesn’t run. That’s why it’s important to safeguard against damage or loss that can stem from any number of incidents, ranging from a fire to theft. Commercial Property Insurance helps cover damage or loss to property, equipment and inventory up to the policy’s limit. It’s important to note that loss or damage due to certain conditions associated with natural disasters, such as flooding, are not necessarily covered by standard property insurance. If you’re in an area prone to natural disasters, you should explore what coverage options are available.
Accidents
Accidents are a fact of life. And if a customer is injured at your place of business, or if you or an employee accidently damage someone else’s property, you may be open to a lawsuit. General Liability Insurance can help cover your business against claims or lawsuits arising from such injuries or damage.
Major disruptions
Although you may have insurance for damage or loss of property, equipment or inventory, there’s a possibility that you could experience a loss of income while you make repairs or have to relocate your business.
Depending on how long your business’s revenue is suspended, it might be challenging to cover ongoing expenses. Loss of Income coverage can offer financial support to help offset lost income, allowing you to meet your financial obligations and reduce the impact of a significant disruption.
For a lot of small businesses, the above risks can typically be covered by what’s known as a Business Owner’s Policy (BOP), which provides coverage in a single, comprehensive offering. The most common insurance policy for small businesses, a BOP can be customized to help meet your business’s specific insurance needs.
Errors and omissions
As careful as you may be to operate with integrity, there may come a time when a third party sees things differently. Professional Liability Insurance, also known as errors and omissions insurance, can cover the cost of a legal defense as well as claims arising from someone who feels they’ve been harmed or suffered a loss from your business’s actions. Such claims can range from actual or alleged acts or errors to libel or slander. Your policy’s cost and coverage will be determined by a range of factors, including the size of your business and the industry you’re in. Talk to your local agent to help ensure you choose the right coverage for your business.
Employee well-being
Even if you have just one employee, it’s important that you look out for their health and safety on the job, including providing coverage if they experience a work-related injury or illness. In fact, in almost every U.S. state, the vast majority of employers must carry workers’ compensation insurance either through an insurance provider or through a self-insured program set up by the employer.
Because requirements for workers’ compensation insurance vary by state, it’s best to check with your state’s insurance department to determine how much coverage you’re required to carry. Your monthly premium costs, or how much you pay for a policy, will differ based on the size of your payroll, number of employees and the specific risks associated with your industry.
Working with an insurance agent can help you find coverage that will help meet the state requirement of having workers comp insurance.
Although these risks are more common among small businesses, they do not pertain to every business. Depending on your industry, there may be additional risks to consider: a hair salon’s risks are different than those of a lawncare company, which differ from those of a bakery or an accounting firm. Working with an insurance agent can help you identify the risks relevant to your business and customize a policy with the right coverages and options to help fit your unique coverage needs. They’ll also help make sure you’re aware of any regulatory or jurisdictional requirements that may affect your business.
source: cnbc.com
