Every business venture entails a certain amount of risk.
This is where business insurance comes into the picture. For an entrepreneur, the kinds of liability can be bewildering. It might even be daunting enough to deter a prospective business owner from even beginning an enterprise.
But this doesn’t have to be the case. All you need is to understand the different types of business insurance and find the right policies for your business.
To help you make your decision, we’ve assembled a short list of some types of small business insurance.
1. Property Insurance
Among the most common types of business insurance policies is property insurance. This is a must, regardless of whether you own or lease your business space.
Property insurance covers loss or damage resulting from fires, theft, storms, and other unpleasantries that arise in the general course of doing business. Certain types of catastrophes, however—such as earthquakes, hurricanes, and floods—may require separate policies.
And even if your business doesn’t have a particular physical space, you’ll still need property insurance for things like inventory, equipment, supplies, etc.
2. Professional Liability Insurance
This type of business insurance requirement is also known as “Errors and Omissions Insurance” or “Malpractice Insurance.”
It’s an important policy and is designed to cover a business against liability for harm that arises through negligence, mistakes, or shoddy performance. This type of insurance is necessary for service industries, but it’s probably also a good idea for most forms of business.
3. Business Interruption Insurance
The purpose of a business interruption policy is to protect against lost income due to some sort of catastrophic event.
For instance, a business whose physical location is damaged or destroyed by fire is not in any position to operate. Since the business cannot function normally, if at all, a period of lost income will inevitably follow. Business interruption insurance allows the business to stay on its feet during this period.
Also, be sure to understand business interruption vs personal injury, since the two policies, although related, are not the same.
4. Workers’ Compensation Insurance
For most businesses, hiring employees is a necessity. With the recruiting of a workforce comes all the headaches and liabilities that are part of the employment process.
Workers’ Comp is pretty much a requirement, and with good reason. It will cover medical costs and lost wages for workers who sustain on-the-job injuries or illness.
Keep in mind that even workplaces that don’t provide the sort of high-risk conditions where injuries are common can be liable. So work with an insurance professional to find the specific policy that your business requires.
5. Product Liability Insurance
If your business is engaged in manufacturing a product, then you’ll need product liability insurance.
It’s pretty much what it sounds like: coverage that is intended to insure against damages that might arise from your business’ products. It doesn’t matter how committed you are to the safety of your product—accidents inevitably happen.
Again, contact an insurance professional to help you find a policy specific to the type of product you manufacture.
Know The Different Types of Business Insurance
Starting a new business can be a daunting prospect. Trying to understand the different types of business insurance that you’ll need doesn’t make it any easier.
But with just a little research, you can find what policies you’ll need to make your enterprise a success. If you’re looking for more business advice, be sure to check out the many small business articles on our site for the best pointers.