Business insurance can be confusing and overwhelming to someone who’s just starting up a small business. Not only are the terms and verbiage unfamiliar territory, but the cost can vary drastically too. How do you know what everything means and what you need?
We have good news for you: below are some of the top ways insurance can protect your small business. There are four core types of insurance that you may need depending on your small business structure. We’re going to break down what each type is and how they might protect you in the long run.
While this is advice, not everything will be applicable to every business and it’s likely in your best interest to discuss questions with an insurance agent. Hopefully, these topics will give you enough background information to know what questions to ask and what options are out there for you to explore.
Commercial property damage
Commercial property damage can come in several forms. While this can sometimes be what’s called an ‘umbrella policy’ that covers multiple things, it is often broken down into different categories. Some of the big areas you’ll want to consider are damage caused by weather or other people.
For weather damage
Commercial property damage can be done by natural events. If you own a piece of commercial real estate, commercial property insurance is almost always a requirement to protect your assets. This insurance can help you if there are any unforeseen natural events that damage your property.
“Commercial property, like personal property, should be insured against weather-related events,” says Loic Claveau, CMO at TakeUs. “Whether your small business is in an attached space or detached building, you’re better off investing in this insurance. Flooding, high winds, fire, and other natural events can do a great deal of damage to a property in the blink of an eye.”
For other property damage
Vandalism or other damage caused by others can really harm your bottom line if you’re not insured against property damage. Depending on your insurance type, you could be reimbursed for some or all forms of damage that are caused to your property in case of a break-in or vandalism.
“It’s unfortunate that this is something we have to think about, but it’s not something you want to risk,” says Hector Gutierrez, CEO of JOI. “A break-in or vandalism can cause thousands and thousands of dollars to recover from. Many small businesses, especially in their early years, would never be able to recover from such an event without insurance.”
Commercial liability claims
Nobody wants to think about having their small business taken to court, but it’s something that happens. People have unpleasant experiences or an accident occurs and insurance companies sometimes initiate a lawsuit. Make sure you’re protected from liability claims with liability claims insurance for your small business.
“Commercial liability is something we don’t think we’ll need but it can be a huge cost to cover if something happens,” says Jim Marggraff, CEO of Kinoo. “Whether your product causes injury or harm or someone is injured on your property; you want to be covered. Liability coverage also covers some of your commercial property, advertisements, or anything that is claimed to be an error on your end in terms of your product.”
“We live in a day and age where it seems like anything can end in a lawsuit,” says Marcus Hutsen, business development manager of Patriot Coolers. “Even if you’re a small business in a small town where everyone knows everybody and you don’t think it could happen to you, it’s not always the customer’s choice. If they’re injured on your property or by your products then you may end up in a lawsuit due to the extensive medical fees that the family simply cannot afford.”
Commercial workers compensation
While we all hope we never have to pay out a worker’s compensation claim, accidents happen. If you have staff, it’s likely that you’ll be mandated to carry workers’ compensation insurance to cover any claims that may be filed if you have a staff member injured on the job. The cost of this insurance often varies based on several factors.
“Workers comp insurance is typically not optional,” says Phillip Montalvo, director of marketing at Azuna. “This is something your state is going to want to see proof of if you have any staff. You’re going to have to be able to cover any accidental injuries or claims that might happen when on the job. Even if your business is super safe and you don’t see risks, accidents happen and claims are more expensive than most small businesses can handle without insurance..”
Commercial auto insurance doesn’t need to apply to every business, but if you use a personal vehicle for company purposes or require your staff to drive a company vehicle. Vehicle insurance will cover the damage to your vehicle, but commercial auto insurance will often cover a little more. That way, if you’re carrying expensive equipment or lose a product during an accident, you can be reimbursed.
“Commercial auto insurance is great for those who frequently travel with expensive merchandise or equipment,” says Melissa Rhodes, CEO of Psychics1on1. “The coverage is much greater than what would be covered under a personal vehicle insurance policy. If an accident is caused by an uninsured motorist and you have a staff or expensive property damaged in the accident within the vehicle, it can be a major blow to your small business.”
Owning and operating a small business is no walk in the park. Small business owners face many risks in the daily operation of their business but these can be mitigated by investing in insurance. The insurance world is often a confusing place where buyers can feel overwhelmed and confused by the different types of insurance and coverage amounts. Do you need all types of insurance? What insurance is required by your state? What happens if you don’t have insurance?
From property insurance to auto insurance and even insurance for your staff or liability situations, there are a lot of things to consider when you’re looking at investing in some form of insurance for your business. Bundling is sometimes an option and there are a lot of options for coverage out there. Take your time and explore what is available before making a decision.
Talking to an insurance representative is one of the best ways to answer these questions, but hopefully, the advice above has helped you gain some perspective on commercial insurance and its purposes so you know what questions to ask.
Robert Haynes, a psychology graduate from the University of Hertfordshire, has a keen interest in the fields of mental health, wellness, and lifestyle.
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