Small business insurance is a policy that protects a firm, company, or any commercial enterprise in a country from financial losses in cases of robbery, lawsuits, accidents, deaths, artificial or natural disasters, or any unexpected setback that may occur during day-to-day activities.
Types of Small Business Insurance
Today, we have various types of small business insurance, which play different roles to an insured Company depending on the kind of business you’re into.
Below are five common small business insurances you need to know before visiting the insurance company.
1. General Liability Insurance
This type of insurance only takes care of injured persons and damaged properties within the work premises or location.
If your products harm a client or customer, the general liability insurance takes charge of the financial cost. This type of insurance does not take responsibility for any other kind of incidents like personal automobile crashes.
A business can also be protected from defamation of character with this type of insurance.
Note: the accident or damages must be unintentional.
2. Worker’s Compensation Insurance
Casualties in the work field are something that cannot be entirely averted. One can’t even tell when such events will take place.
However, if a business owner faces such circumstances, the worker’s compensation insurance will be responsible for the medical care. This type of insurance does compensate employees who get disabled during commercial operation. However, the wages may not be in full.
Also, if an employee dies in the line of duty or operation, the worker’s compensation insurance will take care of the funeral expenses. This type of insurance is advisable for growing businesses all over the world.
3. Commercial Auto Insurance
It is a type of car insurance that covers any automobile that operates for commercial purposes in case of an accident, whether driven by the employee or the employer. It might be a food truck, delivery van, lorry, motorcycle, or company car. If you cause damage in the cause of an accident, commercial auto insurance will take care of the charge for damages.
4. Business income insurance
It is a type of insurance that covers the loss of income or damages to property in a business. For instance, if a fire incident occurs in a cafeteria, and the products for sale get burnt, the business income insurance will make provisions for the loss of income. Or, if a company is faced with a natural disaster like a flood and decides to go for reconstruction, the insurance policy will handle the financial expenditures.
5. Employment practices liability insurance
This insurance policy is a safe umbrella for employers in the business world.
It is common for an employee to want to sue an employer for assault, unruly acts, invasion of privacy, violation of rights, sexual harassment, etc. Being insured by this particular insurance serves as a defense to any commercial establishments.
Importance of Small Business Insurance
Small business insurance is essential for all business owners and businesses to avoid loss of income. Ensure your company is insured today by taking the necessary steps to safeguard your business.
1. Minimizes Financial Loss
A commercial establishment with insurance has minimal financial losses because of the insurance policy they’ve purchased. So whatever circumstances may arise, be it medical bills, lawsuits, damages, reconstruction, Illnesses, compensation, theft, etc., the insurance company handles such cases.
2. Protects and Maintains your Employee
it creates a safe avenue for employees in case of risks or life-threatening events. It keeps your employees in the sense that they will undoubtedly get medical attention when casualties occur without them spending from their pockets. However, it also protects the employer in case of lawsuits.
3. May be required By the Judge
In cases of lawsuits, it will be required by the judge if you’re sued for damages, defamation of character, harassment of an employee, etc. Failure to provide it in court could cost you millions of dollars that will be awarded to the plaintiff who charged you to court.
It could also be requested by a customer to prove if your establishment is responsible enough or safe. This type of insurance is essential for all businesses to avoid future havoc.
4. Natural disasters, theft, or vandalism
In cases like this, if you are not insured as a company or business firm, you might go bankrupt due to multiple financial expenditures in reconstructing your damaged building or restocking your stolen goods. Some businesses fold up from such expenses or find it very difficult to recover from such loss of income.
5. Worker’s Compensation Claim
In a case scenario where a man is working with a milling machine in a bakery and his hands mistakenly get cut off, an insured business establishment won’t have to worry about compensating the injured man from their pockets because they’ve purchased an insurance policy. So, the insurance company takes care of the compensating wages and the medical bill of such persons.
An uninsured company will suffer significant financial loss if such unexpected events occur because compensation will be done from their wallets.
Steps to Consider When Purchasing an Insurance Policy For your Small Business
Buying an insurance policy is like taking preventive measures against all odds in your business.
Below are specific steps you should consider when purchasing an insurance policy.
1. Go for a Reputable Licensed Agent
There are so many insurance providers, so when making purchasing plans, you should go for an agent who has integrity and the authorization to do so to avoid ‘hiccups’. I recommend you go for the ones with good ratings. Ask for guidance from your agent and do some personal research to know the one best for your business.
2. Find the One Suitable for Your Business
When purchasing a business insurance policy, it is wise for the business owner to buy the one suitable for their business. For example, a person who owns a salon and doesn’t render home services. They don’t need a commercial auto insurance policy. Take your time and evaluate the one necessary and valuable for your business.
3. Shop Around
Plan ahead of time. You are expected to shop around to compare and contrast which of the policies is best for your business and which is more affordable. Check and re-check before settling for one.
4. Re-access Every Year
Businesses are meant to prosper and stay healthy, so as your business increase over the year, you should re-access and meet with your insurance agent for changes where necessary. Ensure you do yearly reviews to keep your business adequately protected and ensure unexpected risks are avoided.
A small business insurance policy is essential for your business to protect it from future jeopardy and bankruptcy.
Invest more time in researching before you buy any business insurance policy. Study the type Convenient for your business, no matter the size.
FAQs
Why do I need insurance for my business?
Insurance is like a lifeboat for all kinds of businesses worldwide today. Regardless of how big or small your business is. Business insurance is also a safety tool to prevent financial losses in any commercial enterprise. An insurance policy is needed for your business because it brings business owners economic stability, comfort, and contentment. Aside from all that I have mentioned, insurance can also be required by law. The insurance policy will cover the expenses in cases of any stroke or bad luck, like robbery, injury, vandalism, hurricane, or death.
Where do I purchase insurance for my business?
Insurance policy can be purchased from any insurance company or by contacting an insurance provider who can help you clear your doubts. Still, you should find a reputable agent with the qualification and credibility on an insurance policy that has the experience and your best interest at heart. It would be best if you also shopped around to know the one with the best discounts before buying.
In what ways can I keep my premium costs down?
There are many ways to keep your premium cost down; I’ll explain the easiest way to achieve that.
Asking for a discount from your insurance provider won’t cost you anything. You can research the kind of policy suitable for your type of business so you don’t buy the coverage you don’t need. You can also access the possible risks in your company to ensure you buy the one that will protect your business against such threats.
What if my business needs to change?
Business growth is every owner’s goal, and it’s highly satisfactory. However, this will bring changes to your insurance policy if you have changes in business size, reconstruction, number of staff, or any other change that has to be implemented. You can contact your insurance provider and discuss changes with him when this happens. Your agent will be the one to help you deliberate on the required changes to be made in your policy.
Should insurance be added to my business budget?
Yes! Insurance should be added to your business budget because it’s necessary in every business. It will help keep you in a safer financial position so you don’t buy above the specific budget in your business plan. So it’s advisable to access it every year to avoid risks that come with changes.