Small Business Insurance 101 How to Keep Your Small Business Safe With the Right Insurance Coverage

by Josh Biggs in Business on 13th April 2020

Did you know that the average US company faces at least 37 lawsuits? Or that almost 90% of all US corporations are in some sort of litigation?

Unfortunately, these legal issues extend to small US businesses. In fact, litigation costs these SMBs at least $105 billion every year.

The great news is, you can keep your small business safe and protected from such claims and lawsuits. By getting the right small business insurance policies, you can avoid getting sued. Many of these policies will also help your business get back on track in case of disasters.

Entrepreneurs who are planning on starting their own car rental business need to be aware of the risks associated. Risks such as physical injuries, property damage, and lawsuits could stunt the growth of their business. With general liability insurance, entrepreneurs can have more peace of mind that they will be financially protected should they run into those problems. Read more about car rental companies and the associated insurance policies.

Ready to learn all about small business insurance and the types that you need for your own firm? Then let’s get right into it!

Get Your People Insured With Workers’ Compensation Coverage

As a small business owner, you’re likely asking, “Is workers’ compensation required?” Unless you operate in Texas, then yes, workers comp coverage is a legal requirement. In fact, most states require employers to get this even if they only have one worker!

Employers are those who pay workers’ compensation, but both parties benefit from it. As an employer, workers’ comp will protect you from liabilities and lawsuits. If any of your employees get injured or sick due to work, they won’t be able to sue you.

As for your people, workers’ comp provides them access to prompt medical services. This policy covers their medical and hospital bills for work injuries and diseases. It also replaces lost income in case their condition makes them unable to go to work.

Keep in mind that millions of non-fatal worker injuries and illnesses happen in the US each year. In 2018, there were at least 2.8 million of these reported cases. It was the same in 2017.

That’s how common occupational hazards are, so it’s best that you get workers’ comp as soon as possible.

Buckle Up With Commercial Vehicle Insurance

If your business requires the use of vehicles, you must get commercial auto insurance. As with workers’ comp, most states require businesses to purchase vehicle liability insurance. Each business vehicle should also have separate coverage.

Also, be sure that the policy meets your state’s minimum coverage requirements. Like personal auto insurance, these include coverage for bodily injury and property damage. You may also need to get underinsured/uninsured motorist coverage.

Bridge the Workers’ Comp Gap With Employers’ Liability Coverage

Workers’ compensation has limitations when it comes to covered injuries and illnesses. For example, a worker may still be able to sue for punitive damages, such as for “pain and suffering”.

To better protect yourself as an employer, consider getting employers’ liability coverage. Its purpose is to bridge the gap left by the limitations of workers’ comp. It provides coverage for other occupational hazards that workers’ compensation policies don’t.

Protect Your Business from Claims With General Liability Insurance

You may also know this as “business liability insurance”. It serves as protection from different types of claims, hence the term “general”. Some of these claims include bodily injuries, personal injury, and property damage.

In some states, general liability is a requirement for business licensing. For instance, Texas law requires contractors to purchase general liability insurance. Without this, they won’t be able to even start a project.

Note that state laws on liability insurance vary widely, so be sure to ask your local insurance board. Even if your state doesn’t mandate it, you should still invest in this insurance. This way, you can protect yourself from costly medical and legal defense fees.

Safeguard Your Assets With Commercial Property Insurance

The average cost range of purchasing or leasing business equipment is between $10,000 and $125,000. That’s on top of your office furnishings, decor, inventory, and other supplies.

That’s a lot of money that could potentially go down the drain in case of a crime or disaster. In the US, property crimes occur in the millions — 7.2 million in 2018 to be more precise. These resulted in $16.4 billion worth of losses.

Fires are also very common, with 1.31 million of them having occurred in 2018. These events led to a staggering $25.6 billion in losses.

The average small business insurance cost would only be a very tiny fraction of those losses. It does, however, largely depend on the size of your commercial property. Also, the higher the dollar value of your assets, the higher your premiums will be too.

Still, for as little as $500 a year, you can already buy commercial property insurance. This will already help you safeguard your commercial property and its contents. Most policies provide coverage for stolen, vandalized, or fire-damaged properties.

Keep Cybercrime Losses at a Minimum With Cybercrime Liability Coverage

In 2019, over four in 10 victims of data breach incidents were small businesses. Six in 10 of these victimized SMBs had to fold and close for good within six months from the incident.

If you fall victim to these cybercriminals, your business’ data isn’t the only thing at risk. Your employees’ and clients’ information can also get stolen and leaked. This can then prompt them to file claims or lawsuits against you.

The best thing to do is to improve your cybersecurity protocols and measures. Then, follow this up with a purchase of cybercrime liability protection.

This type of insurance will help cover the costs of recovering from a data breach. Most policies also have specific inclusions on which cyberattacks they provide coverage for. In most cases, however, they also cover the legal fees necessary to defend your business.

Keep Your Small Business Safe and Secure With These Insurance Policies

There you have it, your ultimate guide on how to keep your small business safe from claims and losses. Now that you know the types of coverage you need, it’s best to start shopping around for offers ASAP. This way, you can compare plans and pricing to find out which ones offer the best bang for your buck.

Ready for more pro tips that can help make your business flourish? Then be sure to check out this site’s Business and Marketing sections!

Categories: Business