Next Insurance Policy For Small Business

Now to understand what your next insurance policy should cover, you need to start with a basic understanding of what general liability insurance normally covers. In a nutshell, general liability insurance protects your business from claims relating to:

• Bodily harm or injury
• Damage to property
• Reputational harm
• Advertising injury
• Infringement of copyright

Usually, liability claims will come up during regular business operations. However, like any other claim, they can get pretty expensive, especially for start-ups and small businesses, mainly because they don't have the resources to cover any of the claims.

Consider the fact that the average liability payment for a slip and fall claim is $20k. A reputational harm lawsuit can cost you upwards of $50k. That's why it is so important to have liability insurance coverage because if your business is faced with such a claim, the policy will cover it. That means your business can continue operating without having to be bankrupted by a single claim.

Most businesses do or should have a general liability policy in force. Commercial general liability covers a lot of common risks, but it by no means all inclusive. We get asked a lot, after general liability, What is the next insurance policy for small business?

Ideally, after general liability, your next insurance should cover everything that general liability does not cover. It goes without saying that general liability does not cover everything. Some claims will require a different type of liability insurance which gives your business better protection.

Here is a brief list of everything that general liability insurance does not cover:

Auto Accidents

If you or an employee is driving the company van or car for work purposes, an accident isn't covered. Whether you damage your own vehicle or that of another person's general liability does not cover the damage.

That's why if your business involves driving a vehicle, your next insurance policy should be commercial auto insurance. Commercial auto insurance will cover the cost of any damage to your vehicle. If you want to take things one step further, you can add hired and non-owned auto coverage to the list too.

Injuries To Employees Or Illness Which Stems From Their Work

You will need workers' compensation insurance as the next insurance policy here, which covers employees who have been injured or become ill at work. Workers' compensation will cover medical bills for all ongoing medical expenses.

However, many states require that businesses have workers' compensation insurance even if they have just one employee. You can get the policy from a private company, a state-run agency, or even a monopolistic state fund.

If you don't want to pay for employees' medical bills out of pocket, this should be the next insurance policy you consider.

Damage To Your Business Property

General liability insurance will not cover damage to your business's property. The next insurance policy that does offer coverage is referred to as commercial property insurance. The policy will protect your rented or owned building and associated equipment in the event of damage.

Professional Service Errors

Let's face it if you're a plumber, electrician or any other professional, there will be mistakes made. Often those mistakes can be costly to your clients. That is why you need professional liability insurance that covers all legal costs and damage done to your client.

Your next insurance policy should cover all possible service errors which lead to damage.

Claims That Cost More Than The Policy Limits

General liability insurance, for the most part, will not cover you for a dollar value beyond a certain limit. If you need further coverage, you will have to get commercial umbrella insurance, which helps to extend the limit on your general liability insurance. That way, you don't have to worry about costly claims.

Illegal Acts Or Damages Caused By Wrongdoing

You can get sued for damage done by your employees or yourself on purpose. General liability insurance does not cover this, which is why you need special coverage. However, before you seek this next insurance policy, make sure that you make a list of what should possibly be covered and get a couple of quotes.

We are strong advocates of businesses having insurance that's beyond just the bare minimum. When we say bare minimum, it may mean different things for different businesses. However, we usually mean having a policy that the federal government and state governments mandate. In other words, what is mandated is the bare minimum, but you will want to take things to the next level.

Now before you can choose the next insurance policy, it is important to evaluate your risks. The risks will tell you what types of small business insurance are needed for your business. Every business is different, and so your need for a policy will be different from another.

Possible risks your business can face include but may not be limited to:

• Bodily harm to employees
• Cyberattacks
• Food spoilage
• Lawsuits by unhappy clients
• Lawsuits from customers being injured or becoming ill
• Natural disasters
• Property damage

Sit down and think about the potential threats your business faces. Then come up with a list. Once you have that list, you're in a better position to understand what next insurance policies you need next.

You will want to start by researching all the policies that cover all the potential dangers to your business. Ideally, you'll want to protect yourself against lawsuits and injured employees.

We've outlined quite a few insurance policies that you can get in the previous section, which will cover most gaps in your coverage.

However, we know from experience that small businesses will benefit from various policies depending on their line of work. For instance, an accountant who often handles sensitive information for clients may want to get cyber liability insurance. The policy will cover all the costs related to any data breaches. In the event your servers or computer gets hacked, the policy will pay for the lawsuit and compensation to your clients.

The same goes for if you own a business vehicle. In addition to having just auto insurance, you will need commercial auto insurance. Make sure to discuss this with an insurance agent since they are the best people to help by matching you to the next insurance policy.

Depending on your industry, the risks to your business can change and evolve. Your next insurance policy that covers most of the holes today may not be as good two years from now. Also, as the nature of your business evolves, so should the insurance policy covering potential risks.

Keep in mind that your liabilities will grow as the business grows. If you need to purchase equipment, or if your equipment can break down during operations, you must get the right insurance to cover the risk of that happening.

Take, for instance; your business may not be at risk of a potential workers compensation lawsuit because you're only a one-person business. However, as the business grows and you bring people on board, you'll need those employees covered, and that means the next year or the year after would be a good time to re-access your need for workers' compensation and get it.