13 Types of Insurance a Small Business Owner Should Have


(Source: Forbes)

1. General Liability Insurance: Every business, even if home-based, needs to have liability insurance.  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.

2. Property Insurance:  If you own your building or have business personal property (including office equipment, computers, inventory, or tools) you should consider purchasing a policy that will protect you if you have a fire, vandalism, theft, smoke damage, etc.  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.

3. Business Owner’s Policy (BOP): A business owner policy packages all required coverage a business owner would need. Often, BOPs will include business interruption insurance, property insurance, vehicle coverage, liability insurance, and crime insurance. Based on your company’s specific needs, you can alter what is included in a BOP. Typically, a business owner will save money by choosing a BOP because the bundle of services often costs less than the total cost of all the individual coverages.

4. Commercial Auto Insurance: Commercial auto insurance protects a company’s vehicles. You can protect vehicles that carry employees, products, or equipment. 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.  Many times the non-owned can be added to the BOP policy.

5. Workers’ Compensation: Workers’ compensation provides insurance to employees who are injured on the job. This type of insurance provides wage replacement and medical benefits to those who are injured while working. In exchange for these benefits, the employee gives up his rights to sue his employer for the incident. As a business owner, it is very important to have workers’ compensation insurance because it protects yourself and your company from legal complications. State laws will vary, but all require you to have workers’ compensation if you have W2 employees.  Penalties for non-compliance can be very stiff.

6. Professional Liability Insurance: This type of insurance is also known as Errors and Omissions insurance. The policy provides defense and damages for failure to or improperly rendering professional services.  Your general liability policy does not provide this protection, so it is important to understand the difference.  Professional liability insurance is applicable for any professional firm including lawyers, accountants, consultants, notaries, real estate agents, insurance agents, hair salons, and technology providers, to name a few.

7. Directors and Officers Insurance: This type of insurance protects the directors and officers of a company against their actions that affect the profitability or operations of the company. If a director or officer of your company, as a direct result of their actions on the job, finds him or herself in a legal situation, this type of insurance can cover costs or damages lost as a result of a lawsuit.

8. Data Breach:  If the business stores sensitive or non-public information about employees or clients on their computers, servers, or in paper files, they are responsible for protecting that information.  If a breach occurs either electronically or from a paper file a Data Breach policy will provide protection against the loss.

9. Life Insurance: Life insurance is a personal policy that protects an individual against death. If you have life insurance, the insurer pays a certain amount of money to a beneficiary upon your death. You pay a premium in exchange for the payment of benefits to the beneficiary. 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.

10. Umbrella Insurance: You may want some additional coverage on top of insurance policies you already have. This is where umbrella insurance comes into play. This type of insurance is an extension to an already existing insurance policy and covers beyond the regular policy. This insurance can cover different kinds of claims. Generally, it is sold in increments of $1 million and is used only when liability on other policies has been exhausted.

If you have questions about any of these policies or would like to review the coverage you have in place for your business, please contact your give our office a call at 925-478-5903.