When starting a small business, there are a number of different things you need to think about. One of the most important of these things is insurance.
There are a variety of different reasons to get insurance for your business. In fact, in some cases, insurance is required by law.
Wondering what types of insurance you should use for your business? Read on! Here are 8 types of business insurance that your business needs!
8 Types of Business Insurance
Depending on the type of business you run, you might not necessarily need all of the insurances reviewed below. Specific needs vary based on the services you provide and the possessions that your business owns.
1. General Liability Insurance
If your business sells a product, owns a business property, or provides a service in-person, it needs to have general liability insurance. This is the most common type of insurance for businesses to hold and will cover your business in the event of damages to a third party.
Specific damages covered include injuries as a result of your product, an injury occurring to a non-employee on your business property, and damage to a client’s property. You never know when damages of this kind might occur, so it’s a good idea to have this coverage from the conception of your business.
2. Workers Compensation Insurance
If you have employees, you would be wise to carry workers compensation insurance. In fact, depending on the state you live in, you might be required to carry such insurance.
This is the insurance used to pay workers compensation benefits to employees in the event that they suffer an injury while working for you. While it’s most important for high-impact, high-injury businesses, it’s recommended for businesses of all kinds.
If you don’t have workers compensation insurance, and one of your employees becomes injured while working for you, you will have to pay workers compensation benefits directly out of pocket. Over time, this can get very costly.
3. Property Insurance
The vast majority of businesses should take out a property insurance policy. This type of insurance covers all business property, from your commercial building to your work computers to your work desks and more.
Property insurance kicks in when your business property is affected by thievery, fire, flooding, vandalism, and other uncontrollable factors. It does not cover damage that you or your employees cause.
4. Professional Liability Insurance
Also called errors and omissions insurance, professional liability insurance is used to cover the defense of professional service providers in the event that they’re sued for negligence or malpractice. This includes professionals such as lawyers, consultants, accountants, hair stylists, and real estate agents, to name just a few.
Note, this is entirely different from general liability insurance. Whereas general liability insurance covers damages to individuals and properties, professional liability insurance covers mistakes made within the scope of service.
Generally, it covers the cost of legal of the defense needed to fight a lawsuit in court. However, it can also be used to pay settlement damages.
5. Commercial Auto Insurance
Do you or one of your employees drive an automobile for business purposes? If so, it needs to be covered by commercial auto insurance. This insurance covers any vehicle that you have registered for business purposes, whether it be a car, a truck, an SUV, a van, or otherwise.
Note, this is entirely different insurance from personal auto insurance. If you use your personal auto insurance to try and file a claim for a company car, you will very likely be turned down. You must have a separate commercial auto insurance policy.
Another thing you must know is that commercial auto insurance is broken down into several categories. A few examples of these categories include pickup truck insurance, van insurance, and tow truck insurance.
6. Business Interruption Insurance
The world is unpredictable. One second, the weather could be perfect, and the next second, the ground could be covered in 4 feet of snow. Unfortunately, unforeseen events such as these can result in business slowdowns or shutdowns.
Fortunately, there is an insurance policy available to cover businesses during such events. This insurance policy is called business interruption insurance.
Should your operations suffer at the whims of a storm, a power outage, or some other unpreventable phenomenon, this insurance will pay for your lost time. If you run a big operation, this can save you substantial amounts of money.
7. Liquor Liability Insurance
A specialized, but (sometimes) much needed insurance is liquor liability insurance. This insurance is needed by any company which serves alcohol, whether that company is a bar, a restaurant, or a liquor store.
Liquor liability insurance doesn’t cover the liquor itself, but behavior caused by the liquor. In other words, if one of your customers gets into a fight with someone due to the consumption of the liquor that you sold him, this insurance will cover any legal damages which might float your way.
This is just one of many insurances needed by liquor-serving establishments. This guide can show you the others.
8. Data Breach Insurance
If your business stores private data from customers or employees, you are responsible for protecting that data. Should a cyber attack occur and reveal that data to the world, you could be held legally liable.
Unfortunately, regardless of what you do, cyber attacks sometimes happen. This is why it’s important for you to have a data breach insurance policy.
A data breach policy will cover any court and defense fees needed to fight against data breach lawsuits. Such a policy will also cover settlement money. If your network holds sensitive data, your business needs this insurance.
Looking for More Business Information?
And there you have it, the different types of business insurance needed for your business. While you might not need all of these insurances, you’re sure to need at least a few.
Looking for more business-related information? If so, you can find it right here at Actwitty. We have information on all things business, from marketing tips to operational tips to employee management tips and more.
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