“And the day came when the risk to remain tight in a bud was more painful than the risk it took to blossom.”
- Anais Nin
By the time an entrepreneur starts a business, s/he exposes herself/himself to a set of risk factors. Even before you hire the first-ever employee, your entity is at risk. This factor makes it essential to insure the business using the right plan.
Most small or mid-sized businesses start with BOP (business owner’s policy), which insures all the business’s basic needs. The most common types of insurance covered in this policy type are –
- Business income insurance
- General liability insurance
- Commercial property insurance
Many business insurance agencies offer customizable business owners’ policies or insurance plans. This gives the liberty to choose a plan with maximum or minimum covers within a predefined budget.
Importance of securing your business –
A catastrophic incident like a lawsuit is enough to ruin your business’s entire reputation in seconds. Be it the lawsuit regarding company policies or client contract breach, it leaves a major impact on the venture’s financial condition. Here, one needs to safeguard the business with an insurance plan preserving your entity from external damages.
Business insurance plans suitable for almost every business type –
Liability insurance – Also referred to as errors and omissions insurance, the professional liability insurance plan covers a business entity against any negligence claim that may hamper the reputation of the business. The most common types of negligence claims on a business are mistakes or unexpected failure to deliver services. As such, there is no one-size-fits-all procedure in professional liability insurance. Here, every business addresses its own set of customized policies.
Workers’ compensation insurance – Once you have hired the first-ever employee at your workplace, you, as a business owner, become eligible for availing workers’ compensation insurance plan. This covers the medical treatments, death benefits, and disability in employees. The employees are eligible to avail of the claim even if they perform a low-risk job with medical conditions like tunnel syndrome. This can be a pricey claim to bear. Therefore, one must pay attention to the details and terms of a workers’ compensation insurance before handing over the insurance proofs.
Property insurance – No matter you have purchased or have your office property on lease, you would need to have property insurance for both. This insurance type covers the business’s signage, equipment, furniture, and inventory effectively. Here, mass destruction incidents like earthquakes or floods are not covered. According to the standard policy rules, this may vary depending on the insurance plan type. So, just in case your office location is earthquake-prone, then make sure to insure it separately.
Vehicle insurance – There are businesses where the employees use company vehicles to accomplish the field jobs. Here, the business must get auto insurance for all the vehicle issues for its employees. Auto insurance should protect the business against any liability or accident. This industry’s experts recommend going for insurance against third-party injury or comprehensive insurance, which covers the vehicle damages done in the accident. And just in case the employees are using their own vehicles for remote office tasks, those have to be covered by the business at its own cost.
Product liability insurance – This is when you are a product manufacturer bringing new products to the market. If your business manufactures products and puts them on sale for the general public, this type of insurance is a must for your business. One of the biggest examples of this insurance type is – J&J talcum powder lawsuit. It made the giant brand pay a hefty amount to many who raised questions about its talcum powder. The product liability insurance saved the business from damage, making it easy for the brand to neglect any negative impact on its business reputation.
Home-based businesses – Many entrepreneurs prefer to start their venture with minimal investment. Therefore, go for a home-based business setup. With this, they consider it to be saving some money, but that’s not the case in real life. Unfortunately, the homeowner’s business policies do not cover the home-based business. So, if you are running your business from home, consult your insurer and find out which business insurance type would work the best for you.
Business interruption insurance – Be it losing a client or a catastrophic incident, both can damage the business’s reputation in no time. Here, one needs to have business interruption insurance to safeguard the business from unexpected problems. During the adverse phase, businesses often suffer lost income due to the staff members’ inability. This insurance type is applicable to all companies requiring a physical location to commence the operations. One of the biggest examples of this insurance type is a retail store or booth.
The business interruption insurance helps to compensate the business for the lost income suffered during the adverse event. Here, the business can avoid any financial loss due to a lawsuit. This insurance type’s documentation process may vary based on the business nature.
Business income insurance – There are times when a business cannot proceed further due to the property damages done. In such circumstances, a business income insurance plan proves to be of great help. It helps to replace the lost income while helps to cover the ongoing expenses of the business. Generally, this includes – payroll, rent, and utility bills.
Data breach insurance helps a business respond against a data breach case. Many insurers refer to this as a coverage cyber insurance plan. It offers identity theft monitoring services as well.
The bottom line –
Owning and maintaining the business’s reputation comes with a lot of responsibilities and efforts. This requires looking through the different ways to support the financial state while looking upon your business type’s best insurance plans. Here you can seek assistance from a business advisor if required.