Every business—large and small—needs business insurance. Having the right coverage is especially important for smaller companies since one incident that isn’t covered by insurance can result in a financial burden that threatens the organization’s financial security.
Take so-called slip-and-fall accidents, for example. They’re very common. A delivery person slips on a puddle in your entryway that you’ve failed to clean up, falls, and breaks her wrist. She sues your company for the cost of her medical bills, time off work, and other expenses for a total of $25,000. If you don’t have insurance like a general liability policy and the court finds in her favor, that amount comes out of the company’s revenue.
And that’s a low-end example. Let’s say you operate a trucking company, and one of your drivers runs a red light, hits another vehicle, and its driver and passengers all suffer life-threatening injuries. Fortunately, there is insurance for transportation companies. Without it, even a successful company with financial reserves could be forced into bankruptcy.
So, it’s clear that you need insurance for your small business. But what types of insurance do you need and what insurance company is best for your requirements?
Get the Right Small Business Insurance Policies
Insurance companies offer various policies to address the different risks companies face. That way, you can purchase only the coverage that applies to your operations.
The policies that insurance companies typically offer are:
- Workers’ compensation insurance. This type of insurance is almost always required for companies with employees. It protects workers financially if they’re injured or contract an illness on the job.
- General liability insurance. This policy covers things like lawsuits from non-employees over injuries, property damage, etc.
- Business owners policy (BOP). Also called property & liability insurance, this type of insurance addresses both general liability scenarios and company property damage.
- Professional liability insurance. You may also hear this referred to as errors & omissions insurance. It protects your business from lawsuits if someone sues you for actual or alleged mistakes in the professional advice or services you provide.
- Commercial auto insurance. Most states require you to have this type of coverage if your business owns or leases vehicles for work purposes.
- Cyber insurance. If your business handles sensitive information, like credit card data, this policy can protect you in the event that someone steals that information and uses it to commit fraud.
- Umbrella insurance. Liability insurance policies have a limit on what they’ll pay for a covered event. If you’re sued and owe an amount greater than your policy limit, an umbrella policy can kick in to cover the difference up to its limit.
By doing a little research, thinking about your business risks, and talking with an insurance provider, you can determine which coverages you need.
What to Look for in an Insurance Company
When deciding which insurance company to work with, there are five key questions to ask:
- Does the company have plenty of insurance industry experience?
- Do they maintain high marks with credit rating organizations?
- Do they understand your industry?
- Do they have ample financial resources to cover claims?
- Do they make buying and managing policies easy by letting you do that online?
In short, you want to buy business insurance from a company that’s easy to interact with and that will have your back should the unexpected occur.
You can typically find answers to these questions on an insurer’s website. If not, you shouldn’t hesitate to ask their representative. Almost as bad as not being adequately insured is having the coverage you need but learning your insurer can’t or won’t cover a claim after you suffer a loss.
Don’t let that happen to you and your employees. Do your homework. Let the quality of a company’s products and services (rather than low price) drive your decision. Then purchase policies with confidence, knowing you’ve got an ally who will help protect your business.
