Inevitably, you expose yourself to certain risks the moment you decide to step into entrepreneurship. No matter how careful you are with the business operations, a single catastrophe could lead to significantly huge losses, or even worse, wipe your business out. To mitigate such outcomes, it is essential to have the right insurance for your business. Lucky for you, there are so many types of insurance you can choose from to protect your business best. Here are some of them.
1. Professional Liability Insurance
Professional liability insurance is also commonly referred to as errors and omissions. Ideally, this type of insurance covers your business against negligence claims. Notably, such claims can lead to costly lawsuits. However, when you have professional liability insurance, it can cover the costs of the client lawsuits claiming unsatisfactory work. Some of the bases covered by professional liability insurance include budget overruns, breach of contract, missed deadlines, and work oversights.
Keep in mind that although professional liability insurance isn’t mandatory for service-based jobs, it doesn’t make it any less important.
2. Product Liability Insurance
Product liability insurance is necessary if you are in the business of product manufacturing. Once again, even if you follow all the standard procedures to the letter, you can still find yourself on the other side of the law due to damages caused by your products. Should such a scenario happen, the product liability insurance cover protects you.
3. Workers’ Compensation Insurance
Workers’ compensation insurance becomes necessary as soon as you hire your first employee, whether they are performing a low-risk job or otherwise. The insurance gives benefits to the employees in case of work-related injuries or illnesses. These benefits include the employee’s lost wages during the recovery period, medical expenses, and death benefits to the family if the employee passes away.
Bear in mind that the legal obligations may vary from state to state, depending on your business structure. For instance, the worker’s compensation insurance is optional for sole proprietary businesses in some states.
4. Business Property Insurance
It is crucial to protect the physical location of your business—whether owned or leased—as well as the equipment. That’s why you need business property insurance, also known as commercial insurance, which covers stolen, damaged, or destroyed business property. Some of the things entailed in this type of insurance include computers, furniture, outdoor landscaping, and much more.
It is worth noting that business property insurance is different from homeowners insurance. Unlike business property insurance, the standard homeowner insurance includes little or no coverage for business property.
5. Business Interruption Insurance
Most likely than not, any disaster of some sort strikes, you might be forced to close down the business temporarily. For instance, a fire could interfere with the power lines, leading to business interruption if you rely on electricity. In such a case, your revenue stream is jeopardized while business expenses continue to pile up. With business interruption insurance, it can cover the costs while your business bounces back from the disaster.
6. Stock Insurance
Stock insurance is essential if you hold any stock for your business. It could be on the official business premises or in storage. Should any or all of the stock get lost, damaged, or stolen, the stock insurance policy can cover the replacement cost. That way, your business can stay afloat despite you losing your unsold goods.
The extent of coverage depends on the policy. For instance, some policies cover products in the process of production. Others will even cover goods in trust (goods you haven’t delivered but have received payment for).
7. Vehicle Insurance
Vehicle insurance is crucial if you or your employees use personal or company cars for business purposes. The insurance will help you foot the expenses should the vehicle be involved in an auto accident, and you or your employee is on the wrong. Since there is no standard vehicle insurance policy, your insurance provider will provide a tailor-made policy depending on the business needs. Contrary to popular opinion, vehicle insurance is not a reserve for big companies. The truth is, you can get it regardless of the size of your business.
When you have the right insurance in place, you shield your business from significant financial loss, be it from a lawsuit or an unprecedented disaster. Once you have figured out what your expectations from your insurance are, you can pick the right type.
