Starting a Small Business: What Types of Insurance do You Need?
Starting a small business can be an exciting and rewarding endeavor. However, as a small business owner, you are also responsible for managing various risks. One of the most important things you can do to protect your business is to purchase insurance coverage.
Here are five types of insurance you should consider when starting your small business:
General Liability Insurance
General liability insurance is a type of insurance that protects your business from lawsuits arising from accidents, injuries, and property damage. It covers legal costs and damages if someone sues your business for bodily injury or property damage. For example, if a customer slips and falls in your store or your product causes an injury, general liability insurance can help cover the costs of legal defense and settlement costs.
Workers’ Compensation Insurance
Workers’ compensation insurance is a type of insurance that provides benefits to employees who are injured or become ill while on the job. It covers medical expenses, lost wages, and rehabilitation costs. In most states, workers’ compensation insurance is necessary by law for businesses with employees. Even if you are a sole proprietor or self-employed, you may still need workers’ compensation insurance. Especially, if you work in a high-risk industry, such as construction or manufacturing.
Property Insurance
Property insurance is a type of insurance that covers damage or loss to your business property. This can include your building, equipment, and inventory. Thus, it is crucial when starting a small business. After all, it can protect your business from fire, theft, vandalism, and other disasters. Property insurance can also cover losses due to business interruption, such as lost income and extra expenses due to the loss of property.
Commercial Auto Insurance
Commercial auto insurance is essential if your business owns or operates any vehicles. It provides coverage for physical damage to your vehicles and liability protection for accidents involving your vehicles. Commercial auto insurance can also cover medical expenses and lost wages for you and your employees if you are involved in an accident while driving for business purposes.
Business Interruption Insurance
Business interruption insurance covers lost wages and other forms of income if your business needs to close due to a covered peril, such as a fire or natural disaster. It can help you pay bills, keep your employees on the payroll, and cover other expenses while you cannot operate your business. Business interruption insurance is often included in property insurance policies. But, you may need to purchase it separately to ensure you have enough coverage.
In addition to these five types of insurance, you may need other types of coverage. This depends on your industry, location, and business structure. For example, if you offer professional services, you may need professional liability insurance. This will protect against claims of negligence or errors and omissions. If you have employees who handle sensitive data, you may need cyber liability insurance. This can protect against data breaches and other cyber threats.
Start Your Small Business On The Right Foot
Starting a small business comes with many risks. Purchasing insurance coverage can help protect your business from lawsuits, property damage, and other unexpected events. You should consider general liability insurance, workers’ compensation insurance, property insurance, commercial auto insurance, and business interruption insurance when starting your small business. By taking the time to assess your risks and invest in the right insurance coverage, you can help ensure the success and longevity of your business.
