What Kinds of Insurance Should You Have as a Small Business Owner?

What Kinds of Insurance Should You Have as a Small Business Owner?

June 02, 2024

As a small business owner, having the right insurance coverage can be the difference between success and bankruptcy. While your specific insurance needs may vary widely depending on the nature of your business, there are several types of insurance that can benefit just about everyone. Below, we explain six of the most critical types of small business insurance.

General Liability Insurance

General liability insurance protects your business from lawsuits and legal expenses resulting from accidents or negligence. More specifically, it provides coverage for bodily injury, property damage, and advertising injury claims that may arise from your business operations. Whether your business manufactures or sells products, provides services, or performs some other function, the importance of having general liability insurance can't be overstated.

Property Insurance

Property insurance covers damage or loss to your business property. This includes coverage for damage to buildings, equipment, inventory, and furnishings, due to events such as fire, theft, vandalism, or natural disasters.

Workers' Compensation Insurance

If you have employees, most states require you to carry workers' compensation insurance. This insurance, known as workers' comp, provides coverage for medical expenses, lost wages, and disability benefits for injured or ill employees. Workers' comp helps protect your business from costly lawsuits related to workplace injuries and fines your state may assess if it discovers you're running a business without adequate coverage.

Business Interruption Insurance

Business interruption insurance covers lost income and extra expenses if your business is temporarily shut down due to covered events such as fire, natural disasters, or other unforeseen circumstances. This important insurance helps cover ongoing expenses such as rent, utilities, and payroll during the downtime. It can be used in combination with property insurance if a disaster like a fire or a flood keeps the business from running until the physical damage is repaired.

Cyber Liability Insurance

This insurance is increasingly important for small businesses that collect and store sensitive customer data online. This insurance provides coverage for data breaches, cyberattacks, and other cyber incidents that may result in data theft.

Key Person Insurance

This insurance, also known as key employee insurance, covers financial losses that may occur if a key employee dies or becomes disabled. It helps protect your business from the financial impact of losing a key individual who plays a critical role in the company's success.

Assessing your business's unique risks and consulting with an insurance agent or broker to determine the appropriate insurance coverage for your specific needs is essential.



Important Disclosures:

The insurance content in this material is for general information and not intended to provide specific advice or recommendations for any individual.

This article was prepared by WriterAccess.

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