While the types of insurance you need can depend partly on what kind of operation you run, there are seven types of insurance that are essential for any business.
1) Property Insurance
The place where you conduct your business is the premises, and whether you own or rent your premises, you need property insurance to protect it. The coverage extends to inventory, furniture, office supplies, equipment, and more in the event of a natural disaster or property crime. Even if your business is based in your home, your homeowner’s insurance policy may not be sufficient to protect you if you meet customers or clients at your home or store inventory there. You may still require a separate commercial property insurance policy.
2) General Liability Insurance
In the event that you, your products/services, or your employees are ever accused of causing property damage or bodily injury to a third party, you need general liability insurance. This is one of the most essential types of business insurance policies for all companies, even home-based ones. General liability insurance can protect you from claims of false advertising, libel, or slander, as well as covering the medical costs if someone sustains an injury on your business property.
3) Errors and Omissions Insurance
This type is also called “professional liability insurance,” but despite sounding similar to general liability insurance, it is not the same thing. In the event that you or an employee are accused of failing to perform professional services or negligence in doing so, this type of policy provides defense and damages. In the legal and medical professions, this type of coverage usually goes by a separate name: malpractice insurance. Other professionals that can benefit particularly from professional liability insurance include the following:
- Technology providers
- Real estate agents
- Insurance agents
4) Workers’ Compensation Insurance
If you run your business alone or with a partner but do not have employees, you can get away with not having workers’ compensation insurance. Once you hire your first worker, however, it is one of the types of business insurance policies you simply must-have. Workers’ compensation insurance pays for medical treatments, disability benefits, and more in the event that an employee sustains a work-related injury. It is not just dangerous workplaces that require this type of policy, however. Accidents can happen even in work environments that seem the safest, as anyone who has developed carpal tunnel syndrome from typing can tell you.
5) Business Interruption Insurance
A manmade catastrophe or natural disaster could occur without warning and shut down your business for a period of time ranging from days to weeks to sometimes even months, during which time you stand to lose a lot of revenue due to circumstances beyond your control. Business interruption insurance coverage allows you to recoup the profits that you lose due to a temporary closure after a fire, tornado, water-main break, or whatever the situation may be.
6)Cyber Liability Insurance
As technology changes the way people do business, so do the types of business insurance policies available change and evolve. Cyber liability insurance is a new type of policy that was completely unheard of as recently as 50 years ago. Nowadays, however, it is practically impossible not to use the internet in some way to run your business. However, your business use of the internet makes you susceptible to hackers and cybercriminals. Theft of sensitive customer data could mean the end of your business unless you have cyber liability insurance to cover downtime, computer repair, and data restoration, along with the many different legal fees involved.
7) Employment Practices Liability
The sad fact is that too many employers don’t treat their workers very well, subjecting them to humiliating treatment such as discrimination and harassment or terminating their employment with little or no justification. Some workers may understandably try to fight back against this type of treatment by filing lawsuits against current or former employers. If you ever face legal action by an employee, past or present, an employment practices liability policy can help you to cover the legal fees regardless of whether or not your company is at fault.
Even though insurance coverage is a necessity for your business, it is not always easy to afford. Fortunately, many insurers will offer you discounts on all the types of business insurance policies you need for full coverage.