When we think about costs for running a small business we tend to think about the costs of paying wages to employees, shipping, maintaining the building or property of the business, and so on.
One more equally important type of expense that new small business owners don’t think about as often is insurance. Even though you may believe that insurance is another needless expense, the truth is it’s a wise investment for the security and safety of your business over the long term.
What’s more, is that there is more than just one type of insurance your business is going to need.
Here are the top five types of insurance every small business owner needs:
Commercial Auto Insurance
Commercial auto insurance is designed to protect the vehicles of your company, specifically the vehicles that you use for carrying equipment, your products, or your employees. This way, you can insure each of your working vehicles from collisions and other kinds of damage.
With commercial auto insurance you can insure your work cars, SUVs, vans and trucks from damage and collisions. If you do not have company vehicles, but employees drive their own cars on company business you should have non-owned auto liability to protect the company in case the employee does not have insurance or has inadequate coverage.
General Liability Insurance
The next type of insurance for you to consider is general liability insurance. This is arguably the most important type of insurance to have because it insures you in the event that you have to undergo any legal costs, such as if a product or service you provide harms a customer or if an employee is harmed on the premises of your business.
The policy provides both defense and damages if you, your employees or your products or services cause or are alleged to have caused Bodily Injury or Property Damage to a third party.
Life Insurance
Life insurance will protect you, as an individual person, against death. By having life insurance, the insurer will pay a pre-determined amount of money to a designated beneficiary when you pass away, which will ensure that your loved ones are not financially burdened in the event of your death. In exchange, you simply pay a premium each month.
This type of insurance is very important because it allows for peace of mind. Having life insurance allows you to know that your loved ones will not be burdened financially upon your death.
Property Insurance
If your business is located on an actual piece of property or in a building, or if you have equipment and an inventory of items in a warehouse, then you should strongly consider getting properly insurance. Property insurance will protect you in the event that the physical location of our business and/or your stocked products suffer damage in the event of a fire or if you lose anything to theft. You may also want to consider business interruption/loss of earning insurance as part of the policy to protect your earnings if the business is unable to operate.
Worker’s Compensation
Last but certainly not least, worker’s compensation insurance will insure any employees who are harmed or injured while working at your business premises. Examples of what specifically this type of insurance offers includes medical benefits and wage replacement.
In exchange for the benefits, the employee will surrender their rights to sue you (the employer) for what happened. It is highly recommended that you purchase worker’s compensation because it will protect you and your business from a vast array of potential legal complications.
Currently, all fifty states require that you have workers compensation insurance so long as you have W2 employees.
Insurance For Small Businesses
All in all, the five types of business insurance we have gone over are the top five that you would be wise to consider right now if you haven’t already.
Kidal Delonix is a contributor to Mr. Hoffman's blog. The views and opinions are entirely his/her own and may not reflect Mr Hoffman's views.
