Next Insurance Policy For Small Business
Next Insurance Policy For Small Business. Just about every business owner in the US understands the importance of commercial insurance. Everyone is looking for the next insurance policy for small business that will offer them the most coverage because you can't have enough insurance in some industries.
However, one slip up with your coverage could end up bankrupting your business.
The protections business owners get by choosing a business structure like a limited liability company or LLC as it is called or a corporation only protects business property from lawsuits. However, even that protection is very limited.
High-quality business insurance can help by filling the gaps and ensuring that your assets and business are protected from unexpected disasters. In some instances, you will have to purchase a couple of next insurance policies specific to your industry.
The basics, though, are that most state governments require that every business with employees to have workers' compensation, disability insurance, and unemployment insurance.
Keep in mind that the laws regarding insurance tend to vary by state, which is why it would make sense to visit your state's official website to determine what the required next insurance policy for small business is.
What is the next insurance policy for small business that your company needs? Learn about the different types of commercial insurance policies and how they can protect your business from risks.
Following are some answers to the question - What is the next insurance policy for small business that your company needs?:
- What Does General Liability Insurance Cover?
- What Doesn't General Liability Insurance Cover?
- What Is The Next Insurance We Need Beyond The Bare Minimum?
- Should We Research The Next Insurance Policy Options Available?
- Should We Re-assess Our Risks Every Year?
What Does General Liability Insurance Cover?
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?
What Doesn't General Liability Insurance Cover?
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:
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.
What Is The Next Insurance We Need Beyond The Bare Minimum?
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
- 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.
Should We Research The Next Insurance Policy Options Available?
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.
Should We Re-assess Our Risks Every Year?
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.
Next Insurance Policy For Small Business - The Bottom Line
Your next insurance policy does not have to be made up of a dozen policies. Most small businesses need just one or two more policies in addition to their general liability coverage. However, you need to be aware of the fine print under each policy and understand what the policy covers before signing on the dotted line.
An insurance agent that specializes in business insurance can help you choose the right policies. Most agents can also provide you with quotes and better rates from a myriad of local insurance providers.
That said, you can also apply for a quote on your own. However, when buying insurance, what's covered matters more than price.
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Get useful tips and information about how much commercial insurance costs, small business risks and exposures, how insurance regulations effect your businesses' and detailed descriptions of coverages and exclusions and more. Most small businesses need to buy the following four types of insurance at a minimum to cover their operations from every day risks:
Property Insurance: This policy covers a business if the property used in the business is damaged or stolen as the result of common perils like fire or theft. Commercial property insurance covers the buildings, structures and also business personal property - which includes furniture, inventory, raw materials, machinery, computers and other items.
Liability Insurance: Any company can be sued. Slip-and fall lawsuits are very common and be costly. Customers can claim you injured them or damaged their property - and lawsuits are very expensive. Commercial liability insurance pays damages and can include attorney's fees and other legal expenses. It also ca pay for the medical bills of injured third parties
Commercial Auto Insurance: For vehicles owned by the business. Commercial auto insurance pays bodily injury or property damage costs for which the business is found liable - up the the policy limits for liability and property damage.
Workers Compensation Insurance: In almost every state employers must provide workers comp when there are W2 employees. Workers compensation pays for the medical care of employees and can replace a portion of lost wages - regardless of who was at fault for the injuries.