6 Types of Liability Insurance Policies to Consider for Your Small Business
Did you know that only 55% of small businesses make it to the fifth-year mark?
Running a business is great since you have the potential to earn more than you would in employed by someone else. However, don’t forget that running a small business is risky, as there are issues to handle at almost every turn. You’ll fix leaky pipes today only to have an employee injury the next day.
Insurance compensates you for losses incurred when an insured risk occurs. Read on as we look at suitable types of liability insurance policies for your business.
Let’s get started!
1. General Liability Insurance
General liability insurance is the most vital policy as it covers risks you face every day. It’s not a legal requirement, but you’ll come across clients who’ll need you to have it before working with you. It protects your business so you can focus on daily operations without worrying.
What Does General Liability Insurance Cover?
As the name suggests, general liability insurance covers many risks. Depending on your chosen package, it covers anything from bodily injury to legal fees. Here are some of the expenses from which it can protect you:
What do you do when a client trips and falls over your equipment? Odds are, they’ll demand that you pay for their medical expenses. Ultimately, this may affect business continuity as it reduces profits.
You don’t have to pay out of pocket if you buy this insurance cover. Your insurer will compensate the third party, allowing you to invest your money in other areas.
Let’s face it! These days, minor mistakes can land you in court. While this is a good thing for human rights, it’s not the best thing for small businesses.
Lawyers are expensive, and so is settling a claim. This policy helps you avoid incurring legal fees you have to pay out of pocket.
General liability insurance also covers damages to third parties’ properties. You don’t need to pay for a property’s repair or replacement expenses out of pocket if you have this cover. Your insurer will cover everything from roofing to flooring damages.
The cover also steps in when you advertise your products in a manner that promotes harm. It’ll help you with damage control and pay legal fees if you’re sued.
2. Commercial Property Insurance
There’s an assumption that this policy is only vital for property owners. However, it’s also essential for business owners who lease or rent properties.
It protects the building you work in and everything in it. Shop here for property liability insurance for a small business, which can vary by your particular niche. Here are some of the things this small business liability insurance covers:
You don’t have to close your business if a pipe bursts and destroys all your inventory. A commercial property insurance policy will help you replace damaged goods.
This insurance covers damages caused by water, fire, and other elements. Talk to your insurer to understand instances when your cover will compensate you.
What do you do when a disgruntled employee steals your laptop or printer? Buying new equipment could dent your profits, but you also can’t operate without them.
A property insurance policy ensures business continuity without affecting your income. You only need to ensure that your insurance package includes business equipment.
Lost Income from Business Interruptions
We can’t always foresee the future. You may need to close your business after a fire or water damage to oversee repairs.
Your cover may compensate you for lost business income owing to these events. This makes it easier for you to get back to work after finishing repairs.
This is a vital policy if you own the building that houses your business operations. This cover pays for expenses incurred repairing any part of the building.
Can you imagine getting a new roof after a heavy storm free of charge? You can’t afford to miss out on this, more so now that repair costs are constantly rising.
3. Errors and Omissions Insurance
Dealing with professional negligence accusations can be time and resource-consuming. An errors and omissions policy protects you from dealing with these accusations alone.
It provides financial resources, up to a specified limit, for you to handle these claims. Here are some of the things this policy covers:
Did you know that 90% of investors lose money in the stock market? Many end up suing their investment managers, sometimes blaming their losses on negligence.
What do you do when you make a bad investment and lose your client’s money? You have to prove that you didn’t lose the money out of negligence, and this policy can help you with that.
It’s normal to want to portray your business in the best light. After all, disclosing defects can affect your image and reduce your client base.
But what happens when you overlook a defect that costs your clients money? You can protect yourself through this cover, as it reimburses clients for losses.
Time is crucial in business since every minute lost translates to money lost. Some clients may go as far as suing you if they lose money from a missed deadline.
You can protect yourself and your business by getting an errors and omissions policy. It compensates clients for your mistakes, so you don’t have to pay them out of pocket.
4. Tools and Equipment Insurance
Equipment and tools are a vital part of most business operations. Without them, you would have to cease operations and close your business.
The best way to avoid this is through a tools and equipment insurance policy. It’s vital for equipment-reliant businesses like construction and cleaning contractors. Here are some of the things this policy covers:
Damage to Borrowed Equipment
Can you imagine having to buy new equipment for someone else? Not the best of situations, right?
You can protect yourself from having to do so by taking an equipment insurance policy. It pays for damages to borrowed tools.
Let’s be honest! Employees can be a business’s greatest liability, as some steal from their employers.
You can close your business, pay for new tools out of pocket, or let your insurance handle it when this happens. The latter is a better option as it doesn’t interfere with operations or affect profits.
This insurance also covers damage resulting from fire, water, or other covered events. With this policy, you don’t have to worry about what to do when your equipment warranty period ends.
5. Worker’s Compensation Insurance
Many types of liability insurance policies are optional, but this one isn’t. That’s because roughly 2.3 million people experience work-related injuries every year. This policy is essential for legal compliance and your business’ protection.
Here are some of the costs it covers:
With healthcare costs rising, you shouldn’t risk paying medical expenses out of pocket. Worker’s compensation insurance pays for everything from assessment to rehabilitation. The policy protects your business and gives employees peace of mind.
This policy also compensates employees for income lost during the recovery period. This way, employees can focus on getting better and getting back to work.
Permanent injuries affect employees’ ability to work, thus warranting compensation. Worker’s compensation insurance takes care of these employees, so you don’t have to.
Unfortunately, some work-related accidents are fatal. This leaves grieving families with unexpected financial burdens and businesses with unforeseen expenses.
Worker’s compensation insurance eases the burden on both parties by covering some expenses. The policy may cover funeral costs and lost wages.
6. Commercial Auto Insurance
This policy is vital regardless of whether you have one commercial car or a fleet of them. It covers accidents that occur when running business-related errands. Here are some of the expenses this policy covers:
You won’t need to pay medical expenses out of pocket if you buy this policy. Instead, your insurer will pay for medical evaluation, treatment, and rehabilitation.
Even the most careful drivers can hit people’s properties. What do you do when a company car hits someone’s mailbox or gate?
You don’t have to do much when you have a commercial auto insurance policy. You only need to contact your insurer, and they’ll take care of repair expenses.
Car Rental Reimbursement
Some insurers will reimburse your car rental expenses up to a specific amount. This allows you to resume business operations as you wait for your new car or your old one to get fixed.
Compare Different Types of Liability Insurance Policies to Know Which One to Buy
Liability insurance coverage is essential because businesses are inherently risky. You’ll come across many types of liability insurance policies once you start shopping.
Like the commercial auto insurance policy, some are specific to certain risks. Others, like the general liability insurance policy, cover various risks. Your business operations will determine the right policies for you.
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