To control costs, often small businesses and startups get tempted to invest in only the business insurance plans that they are legally bound to have. However, merely an accident in an uninsured area is more than enough to lead to huge losses that they can hardly sustain. According to Charles Spinelli considering the gravity, small business owners need to analyze the unique risk areas related to their business and opt for an ideal combination of insurance that helps them to deal with such unforeseen losses, sustain, and grow.
Why do Businesses Need Coverage of Business Insurance?
The future is unpredictable and erratic. Having business insurance is important because it insulates a business regardless of the size from potential financial setbacks it experiences in the event of any crisis or unanticipated events. While there is no one-size-fits-all commercial insurance, the insurers are prepared with a collection of insurance types to safeguard businesses from counting a huge loss.
Choosing the exact mix of insurance policies depends on the unique risk areas and circumstances of a business. Therefore one needs to be insightful while analyzing those factors which is the key to opting for the right combination of business insurance types and thereby recovering the losses if an accident strikes and continue operating the business without any hassle.
What Are The Different Types Of Business Insurance?
Business insurance is available in different types, and a business owner needs to go for the most suitable combination of policies to protect the company from possible losses. According to Charles Spinelli, apart from examining the risky areas, it makes sense to consult an insurance expert to determine the exact insurance policies suitable for their business. Following are some popular types of insurance ideal for a small business need.
Business Owners Policy (BOP): BOP is undeniably one of the most demanding types of business insurance given that it offers general liability coverage. Typically its coverage area includes:
- General liability insurance.
- Business interruption insurance.
- Business property insurance.
The general liability itself covers issues like property damage, personal and bodily injury, advertising injury, and so on.
Business Interruption Insurance: the objective of the insurance plan is to help businesses get coverage of lost income due to temporary suspension of operation caused by a disaster like a flood, hurricane, fire, theft, or collapsed premises. This helps businesses to continue paying operating costs such as rents, mortgages, salaries, taxes, etc. and thus helps them sustain and get back to operation again. Generally, the plan comes bundled with BOP.
Workers’ Compensation Insurance: First of all it is an obligatory insurance type for almost all types and sizes of business. As workplace injury is a common incidence, having workers’ comp insurance coverage protects the business owner from paying for medical expenses and facing personal injury claims and penalties by the state authority. Workers’ compensation takes care of all medical expenses, lost wages, and rehabilitation expenses and also offers death benefits to the survivors of an expired employee due to workplace injury.
Errors And Omissions (E&O) Insurance: businesses of all types including SMEs that specialize in professional services, should go for E&O insurance, aka professional liability insurance. The coverage protects businesses in case any client claims the services offered by the business caused financial losses and demands a settlement.
Cyber Insurance: Considering the rising number of cyber-attacks, outfitting businesses of all sizes with cyber insurance has become integral. If vital business data is hacked or leaked, cyber insurance or data breach insurance helps get coverage of the costs due to the damage.
Apart from the above, small businesses can consider having auto insurance ( if it is used for business purposes), product liability insurance, and management liability insurance among others considering their business risk areas and with professional help.
