We all are familiar with health insurance and car insurance. Still, being in the business world, there is a whole lot more business insurance protection you need to familiarize yourself with and consider. Having the right type of insurance for your small business is essential for its survival and growth.
What Is Business Insurance
Just as an individual needs insurance for various reasons, including health, security, and natural calamities, businesses also need insurance to protect themselves from legal, financial, and other claims arising from unforeseen disasters and occurrences.
Every business across different industries has its own distinct risk. In choosing the best-fit insurance coverage, business owners need to consider all aspects of their company. These include:
- The business model;
- The size of the business;
- The number of staff employed;
- The products or services offered;
- The work vehicle used; and,
- The working conditions of the employees.
Ultimately though, it is up to business owners to decide whether to get insurance to protect their business interests or not. If they plan on getting insurance, the decision is solely up to them what type of insurance they deem most fitting for their business.
Why Is Business Insurance Necessary for Your Small Business
Although we all know that business insurance is crucial, a survey showed that more than 80 percent of the 1,100 small business owners in the U.S. rely completely on their personal insurance for business protection or do not have business insurance at all.
Even with health insurance coverage, data gathered by the Small Business Administration showed that small business employees were twice as likely as large business employees to be uninsured. This only showed that business insurance is the least priority of the majority of small businesses.
If you are on the fence about whether to get insurance to protect your small business interest, consider these crucial points:
The topmost reason you need to get insurance for your business is that it is required by U.S. law. According to the Small Business Administration, businesses with employees need to have minimum insurance coverage, including unemployment, workers compensation, and disability.
Protection Against Lawsuits
Without insurance protection, your company could easily be a target of a wrongful lawsuit by a client or even by an employee. In most cases, costly lawsuits are why a number of small businesses close down due to bankruptcy. Securing the right insurance goes a long way.
It cannot be denied that employees are the most vital assets of a company since, with their efforts and productivity, your business will succeed. Making sure they have the right insurance coverage benefits not only them but also your business interest.
The public will put more trust in your business if you have complete insurance coverage to answer for any business-related misfortunes. Your insurance sends a message to prospective employees, partners, and even clients that their interests will be protected as well.
Types of Essential Small Business Insurance
Workers Compensation Insurance
One type of insurance mandated by law is the workers’ compensation insurance. It fundamentally covers medical expenses, wage portion for missed work, and compensatory damages for workers who met a job-related accident or injury. Businesses that fail to have this insurance coverage are facing not only fines but even criminal liability.
Another government-mandated insurance coverage is unemployment insurance, which employees could use when they are out of work. Unlike other business insurance that has to be purchased from an insurance company, the state is responsible for its administration. What business owners do is mainly to pay the federal unemployment taxes and state unemployment taxes.
The third type of insurance that is required by law is disability insurance. Unlike other government-mandated insurance coverage, disability insurance does not require that your illness or injury have to be work-related. Although, as of the current, only five states require its employers to provide this, offering short-term disability coverage makes you a more competitive employer.
Commercial Auto Insurance
Small business owners also need to secure commercial auto insurance since personal insurance coverage does not usually extend to work vehicles. This type of insurance covers any liability due to work-related accidents committed through the company vehicle. But before signing anything with your insurance provider, talk first with your car accident attorney to ensure you get a fair settlement.
General Liability Insurance
Although general liability insurance is not required by law, having one is extremely useful in protecting your business from third-party claims arising from injuries caused by your products, services, or properties. This insurance coverage is essential if your business is in industries where accidents are more conceivable to occur, such as manufacturing.
Discussion on insurance coverage may be tedious, but with the help of a reputable insurance broker, landing the right policy for your small business would not be hard.