It’s not easy to navigate the world of commercial insurance. While many small business owners know that they need to have it, very few know exactly what kind of insurance to get. As a result, many small businesses often end up over, or under, insuring.
What Commercial Insurance Should a Small Business Have?
Before you start hunting for policies, you need to go over everything that your insurance needs to cover. Once you have a comprehensive list, you can start looking at different options, and see which ones match your needs.
Your next challenge is finding out which policies are available. Here’s a list of different commercial insurance policies, to help you get started:
- Commercial Property
- General Liability
- Professional Liability
- Commercial Auto
- Cybersecurity
- Directors/Officers
- Crime
- Business Interruption
- Key Person
Here they are more closely:
Commercial Property
If you have any physical assets, this insurance policy is an absolute must-have. Don’t cheap out on it, either. You’ll need to be covered for things like fire, floods, and theft.
Many businesses end up under-insuring and forget to include things like plant, inventory or equipment. If your business can’t run without it, make sure it’s covered.
General Liability
Nobody likes to imagine the worst, but as a business owner, that responsibility falls to you. Imagine someone getting hurt on your premises or using your equipment. One large liability claim can ruin your business.
That’s where general liability comes in. If you ever need to defend yourself against any damage or liability lawsuits, it will protect you.
Professional Liability
Although they may sound similar, professional liability is vastly different from general liability. Instead of covering accidents, this type of insurance protects you if your service affects a client negatively.
For example, let’s say that you’re a business consultant and you give a client advice that damages their business or income. If they hold you responsible, professional liability insurance will cover the lawsuit and damages. It’s especially useful for consulting, legal, or accounting firms.
Commercial Auto
You can either ensure your cars individually or, if you have a fleet, get commercial auto insurance. There are no guarantees on the roads, and you need to insure your vehicles in case of damages or accidents.
There are several different components to a commercial auto insurance policy, including liability insurance, direct compensation, comprehensive, and more. Make sure to discuss what you need with your insurer.
Cybersecurity and Liability
All businesses rely on some level of technology to run. You’ll likely have a network, client information, and sensitive business data stored on your system. Small businesses are prime targets for hackers.
While a large corporation might be able to bounce back, your smaller business likely won’t. With a cyber policy, you’ll be covered in case of a ransomware attack, or if sensitive client information is leaked. Make sure you know which attacks and triggers you’re covered for – not everything is included under one umbrella policy.
Directors and Officers Liability
Diligence, Loyalty, and Obedience. These are the three duties of a company’s directors, but that doesn’t mean that they won’t make mistakes. With D&O insurance, your business directors are protected in case of a lawsuit. If you’re an NGO, this is highly recommended.
Crime
As business owners, we’d love to be able to trust all our employees. Unfortunately, it’s your responsibility as an owner to prepare for the worst, including an employee defrauding the company.
With a crime insurance policy, you’ll be protected against property theft, fraud, forgery, or other crimes committed by a less than an honest employee.
Key Person
Close your eyes and try to imagine someone that your business can’t function without. Maybe you’re that vital link in the chain, and perhaps it’s someone else. Whoever it might be, losing them would be catastrophic.
That’s why key person insurance exists. For example, imagine you’re a highly specialized tech company. You have exactly one software engineer on staff that can service your primary client, but he’s just been booked off indefinitely.
With key person insurance, your costs of hiring and training someone new are covered.
Business Interruption
While the other types of insurance cover direct losses, this policy serves a different person. Commercial property insurance, for example, will cover property damage and equipment due to flooding.
However, you spend the next week repairing and replacing equipment. During that week, your business is at a standstill, losing precious revenue. A business interruption policy will help cover your lost income, keeping you in business.
Protect Your Business
Finding the right commercial insurance isn’t fun, and it certainly takes a lot of time, research, and work. However, it’ll help you manage your company’s risk in the long run. In the end, having the right commercial insurance plan will protect both you and your small business.
