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DQ News: Get Protected: Insurance Types for Small Business Owners

All too often entrepreneurs and small business owners are so caught up with developing a brand, recruiting employees and creating a solid marketing plan that they forget to purchase one of the most important things that can protect them from the “risks” typically associated with start-ups—small business insurance. While getting insured may be the last thing on your mind, it shouldn’t be neglected; small business insurance can protect you from damages such as theft, lawsuits and injuries –issues that if not handled correctly can mean the demise of your new business.

That said, while there are a variety of business insurance types available to cover almost any incident, for small businesses there are only four: General Liability, Product Liability, Professional Liability and Commercial Property. To learn more about each type of insurance and to get a better idea of the type you will need to cover your small business, continue reading below.

1. General Liability Insurance: This insurance, while the most basic, is the most important type of insurance any small business owner should own no matter if he or she sells a product or service. What this insurance type does is protect you whenever a legal issue arises such as accidents, injuries, or claims of negligence—it can help you with the costs of defending yourself from in court due to a lawsuit, can help protect against you paying out of pocket for property damage, and can even help cover medical expenses due to bodily injury on the job.

2. Product Liability Insurance: If you are a small business owner and you manufacture, distribute, or wholesale a product it is best that you get this type of insurance. What it does is protects you from financial loss associated with your product if a defect for example results in causing injury or bodily harm to a consumer. Granted the amount of insurance you’ll need to buy will vary on the kind of product/merchandise you sale. For example, owning an apparel store will have much fewer risks than owning a baby toy store or an appliance store.

3. Professional Liability Insurance/ Errors and Omissions Insurance: If your business revolves around providing a service, it would be in your best interest to purchase this type of insurance. This is because this type of insurance protects you if your business is ever sued for errors on your part when providing services to your costumers (we’re talking about malpractice and negligence). Depending on which state you live in and what profession you are involved in you may be required to purchase this insurance automatically by law. For example, if you’re a physician, most states require you to have malpractice insurance.

4. Commercial Property Insurance: This type of insurance helps protect you from financial and property damages associated with natural events such as fires and weather storms as well as those due to vandalism for example. This can include anything from actual damage to the building, the destruction of important documents, or technical appliances such as computers for example. It may even cover the loss of income due to particular damages. There are two types of commercial property insurance: all-risk policies and peril specific polices. The type you get should depend on the type of area your business is located in. For example, if your office is in an area that particularly has a lot of earthquakes or a high crime rate for example, you should definitely consider purchasing a peril-specific policy since this insurance guarantees coverage for losses that are listed on the policy—you would make sure earthquakes were on the list for example.

Additional Note: For those who run an at-home based small business there is no specific insurance available to cover losses. While having traditional homeowners insurance policy may cover some losses such as property damage, it would be in your best interest to acquire multiple insurance policies such as general and professional liability to cover all other grounds.

This is a guest post from Carol Wilson who writes for business insurance. She contributes articles about a variety of marketing, business, stock market, small business topics. She can be contacted at: wilson.carol24@gmail.com.

Photo by Chris Yarzab.

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