Business Insurance

Do I Need Insurance for My New Small Business?

If you’re a small business owner, it’s a vital part of your operations to include the necessary insurance you require to stay protected against all of the myriad of risks your business faces.

Not only is insurance generally required by law in most states, but it can also be required by clients or specific contracts.

Most importantly, it’s crucial to practice prudence by purchasing the correct insurance, as you can never anticipate losses. Without the proper insurance in place, you are putting yourself and your business on the line.

Significant losses in your business or organization can occur for a variety of reasons:

• Property damage to or within commercial buildings
• On-road accidents for those who use commercial vehicles
• Employee injuries
• Theft
• Data breaches
• Liability claims
• Natural disasters

Unless you want to be liable for losses, and you are starting a new small business, then you will definitely need new Small Business insurance. There are plenty of ways to go about finding what you require to stay properly insured such that your assets are protected. Simply list what responsibilities you have and go from there. Consider general, property, employees, if you use vehicles in your business, and how much you personally have at stake in your business if you were to suffer a significant loss, i.e. are you a sole proprietorship or an LLC?

New Business insurance is not only important but vital to the success of any small business. It is not an option.

Which Types of Business Insurance Do I Need (for my new business)?

There are many factors that will affect what types of Business insurance your business may need, including:

• The type of work you do and the industry you are in If you are in landscaping, then you may need to purchase insurance to cover costs resulting from pollution caused by pesticides and herbicides. If you happen to be a lawyer, then you will need a distinct set of coverage as well.
• The Number of employees and customers you have For those who employ a large amount of people, then you will most likely have a larger amount of Workers Compensation insurance. This can not only protect you in case of an injury, but also protects your workers.
• If you deal in intellectual property If your business is a tech start-up, then one the types of Liability insurance policies you may need to have would include Intellectual Property insurance. This would be to cover for instances of theft or damage to your intellectual property, such as original ideas that aren’t protected by copyright or a patent.
• The amount of property and equipment you own This can be incredibly important if your business is completely dependent on the property that you own and equipment you use. Without a forklift at your job site, a fleet of taxis, or construction equipment, your business will suffer and as such, it is highly recommended that you insure your property and equipment should anything happen to it such as fire, theft, loss or negligence.

Different types of Liability insurance help to cover the costs of property damage and liability claims, but you may not need coverage for all types of Commercial insurance that exist.

Additionally, as your business grows, you may need to change the types of Liability insurance you have, whether that means adding or reducing coverage throughout your business’s life cycle.

Main Insurance Types You Should Consider

When buying new Small Business insurance, the main types of Liability insurance you should consider depend on different aspects of your business. Even though all businesses are different, there are some insurance types that are needed in almost every type of business or industry. These include General Liability, Workers Compensation, Professional Liability, Cyber Liability and Business Owner’s Policy (BOP).

General Liability

Commercial General Liability insurance is one of the most common, as well as most important, new Small Business insurance policies to have. It mainly protects your business from lawsuits from third parties such as customers. General liability also protects you from any lawsuits resulting from bodily injury, property damage or advertising liabilities (libel, slander and defamation, for example). When dealing with a bodily injury case, the most frequent incident is that a customer slips on a wet floor, trips over something or happens to be burned by something on the premises. This would always be covered by General Liability.

For property damage cases (also covered by general liability), this would come into play regarding contractor work or anytime that your business performs a service on a customer’s home. If your employee made a mistake and damaged something, then with property damage included in your General Liability insurance, this situation would be covered.

Due to social media being huge in the modern world of business, Advertising Liability is now a real threat. Employees are a reflection of your business, and if they happen to post something on social media regarding a competing business, you could find yourself facing a defamation lawsuit. General liability insurance does include Advertising Liability, which is a crucial aspect of a modern-day business.

Workers Compensation

Since you value your employees, you should always have some type of protection in place in case someone becomes ill or injured on the job. Most of the time, Workers Compensation is also mandated by the state, but be sure to examine the regulations for where you operate your business from.

Workers Compensation insurance comes in many forms, but generally covers: Injuries and illnesses: Workers Compensation insurance will pay for medical expenses as well as recovery from work-related injuries. If an employee cannot work, then Workers Comp will pay for their missed wages until then can resume work.

• Funeral expenses: In the event a worker is involved in an accident that results in death, the workers comp policy will pay for funeral expenses as well as support for their children.
• Liability expenses: Workers Comp also includes insurance for if your business is sued due to workplace injury or illness. You will not be liable for legal fees.

Professional Liability

For those businesses that offer professional services, Professional Liability is the coverage needed. It is also known as Errors and Omissions (E&O) insurance, or Malpractice insurance. General lawyers, architects, therapists and doctors will hold Professional Liability insurance.

The coverage under these types of policies include:

• Errors and Omissions: For general mistakes that are not done maliciously, but impact the client you are serving.
• Breaches: Accidental breaches of contract that prevent you from being able to fulfil a contract.
• Defense costs: In case of mistakes that bring you to court, E&O insurance will take care of your legal fees.

Business Owner’s Policy

Business Owner’s Policy (BOP) is similar to an insurance package. It includes property coverages such as building and business personal property as well as some aspects of General Liability coverage. BOP insurance is a great way to buy new small business insurance that will encompass many factors. You can also add coverage for items such as business interruption, which will cover you in the event that you cannot operate your business and generate income.

There are aspects of both General Liability and Commercial Property insurance within BOP. If you find yourself within a lawsuit, the court fees and lawyer fees pile up quickly; BOP will keep you covered.

Cyber Liability

Cyber risks are very real. Data breaches, cyber extortion, identity theft, damage to reputation, loss of income and data loss are unfortunately more common than ever, so having Cyber Liability insurance will ensure you do not fall victim to significant financial loss from hackers or other cyber threats.

Commercial Auto

For any business that uses a car, this insurance is legally necessary and also very protective. Whether you run a pizza restaurant with a delivery service or a daycare that picks up children from school, personal auto insurance will not cover you in the event of an accident. Therefore, this is where Commercial Auto insurance comes in and keeps you covered to avoid unnecessary loss.

Differences Between Coverage

Although there are many similarities between General Liability, Worker’s Compensation, business owners policy, Professional Liability and Product Liability, there are most certainly differences as well. It is very important to understand these differences and know what coverage your business should carry.

• Workers Compensation vs General Liability

These are both very important policies that cover completely different aspects of your business. General Liability covers your business if a lawsuit happens to arise, such as legal fees, expenses, settlements and judgments.

Workers Comp specifically covers your employees for work-related injuries, medical expenses, missed wages and death. It also covers lawsuits for work-related injuries where General Liability does not.

• BOP vs General Liability

The main difference is the lack of ability to add Property insurance to a General Liability policy. General liability does not allow customizations, while BOP can become an umbrella policy and be tailored to what your specific needs require.

• Professional Liability vs General Liability

Designed to protect from lawsuits resulting from your professional services, Professional Liability is not for everyone. General Liability is completely different in that it pays for bodily injury and property damage claims. Especially if you run your business out of your home, as many therapists do, there are risks associated with clients coming to see you. General Liability and Professional Liability both protect you, but are associated with two completely different protection needs.

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