Owning a business has become more bureaucracy-filled over the last few decades. In 2022, company owners must register their business, establish a tax structure, and purchase several insurance policies.
Many company owners resist obtaining a portfolio of insurance policies. It can easily cost between $500 to $1,000 monthly. Plus, you pay your monthly premiums and don’t see a payoff.
Insurance is an expense with no payoff until something happens. Keep in mind that insurance acts as a hedge against potential business income losses. It protects owners against losing their company after a lawsuit.
For example, companies that have fleets of cars benefit from obtaining a solid commercial auto policy. If your employees cause an accident or find themselves involved in one, your policy kicks in.
Let’s look at seven types of insurance to consider as a small business owner.
1. General Liability
An important policy that business owners must pick up is general liability. It’s more important for retailers and commercial locations that receive visitors. However, any business that receives clients benefits from having this safety net.
The policy covers damages from bodily harm caused to an individual on your property. Moreover, it helps defray legal costs, even when a court rules in your favor.
Lawyers charge between $150 to $1,000 an hour. You can also keep a corporate attorney on retainer. Their fees become a recurring monthly expense.
The point is that legal representation is not cheap.
2. Employment Practices Liability
In addition to an increase in bureaucracy, the United States has become more litigious too. Employers must document their hiring and employment practices. Plus, they must maintain detailed records of employee performance. If you need help with online legal documents, forms and contracts, don’t forget to check out LawDistrict.
Employment practices liability insurance helps cover the legal costs in case an employee takes your company to court. It covers cases that involve allegations of:
- Wrongful termination
- Workplace harassment
Small business owners must obtain worker’s compensation with Farmerbrown Insurance; it’s a government mandate. Self-employed individuals must obtain it too. Read more about self-employed worker’s comp.
3. Professional Liability
Professional liability insurance is also known as errors and omissions insurance. This policy covers individuals in professional industries against loss of income when a plaintiff takes them to court.
Professionals include accountants, doctors, and lawyers. The policy kicks in when they face negligence or misconduct charges.
4. Business Income
Very few people predicted that the United States economy would come close to complete a standstill in 2020. No matter how much anyone planned, business owners experienced interruptions for a few days at the least.
If a company experiences an interruption caused by peril, a business income policy kicks in. Perils included in this policy are fire, theft, and wind.
5. Commercial Auto
All companies that use at least one vehicle for commercial purposes must obtain a commercial auto policy. This policy is the commercial version of personal vehicle insurance. Therefore, it shouldn’t cause company owners to wince. Plus, it protects the vehicle, your company, employees, and goods inside the vehicle at the time of an accident.
6. Commercial Umbrella
The commercial umbrella policy is an insurance policy for your current liability policies. If you lose your case in court and must pay damages, your liabilities policies kick in. If the coverage amount doesn’t cover the damages entirely, the commercial umbrella picks up the difference.
7. Life Insurance
Once a company reaches corporate status and has investors, those who own it must put a plan of succession in place. Plus, they must insure the owner and board members.
Even though a small business operates on a much smaller scale, the owner benefits from obtaining a life insurance policy. It helps the business and family members deal with the financial aftermath of your death.
Bonus: Business Owner’s Policy
Sometimes bundling services makes things easier and saves business owners money. Insurance is not an exception. If obtaining three, four, or five insurance policies for your company sounds cumbersome, consider obtaining an insurance bundle such as a business owner’s insurance policy. The BOP bundles general liability and commercial property policies.
Until things become simple again, small business owners should obtain a few commercial insurance policies. Plus, insurance that focuses on the owner is another must. If you bundle, you can save on the costs. You can also opt for all-in-one policies.