To build a successful business, you need to take calculated risks as well as mitigate existing business risks. One catastrophic event or lawsuit can wipe out a business. However, with the right mix of insurance policies, you can protect your business against many of the devastating risks, according to a recent article published in Forbes Magazine. To ensure your company survives customer or employee injury, product failure, significant natural disasters, and other business-associated risks, you must purchase and maintain the proper type and amount of commercial insurance.
The following are the 7 types of commercial insurance policies that you need to protect your business.
Professional Liability Insurance
Professional liability/errors and omissions (E&O) is essential for business protection if your work entails offering professional advice and services directly to customers. It protects you from claims of providing improper services, failure to perform, and negligence. For instance, a client can sue a financial advisor for investment losses. Similarly, a client can sue a software developer for a data breach resulting from a programmer’s mistakes and oversights. Professional liability or E&O will cover the costs resulting from professional negligence. Your insurance agent will help you get a professional liability policy that addresses the unique set of concerns related to your industry.
Property insurance covers any damage to your property – including furniture, inventory, equipment, and signage – resulting from theft, fire, storm, or any other covered loss. Several property insurance policies cover the costs of preventing any further damage to your business. For instance, after a fire, your policy can pay for debris removal and provide you with the funds required to keep your business afloat until you make the necessary repairs. However, you should note that standard property insurance policies typically exclude mass destruction events such as earthquakes and floods. You can purchase supplemental coverage to protect your business against such risks.
Workers’ Compensation Insurance
Workers’ compensation insurance benefits your employees who’ve gotten sick or hurt while on the job, helping them in the following ways:
- Pay for medical care
- Replace lost wages while they are in recovery
- Cover ongoing care
In exchange for these benefits, employees give up their right to bring a work injury-related claim against their employers, regardless of who is at fault.
All states in the U.S. except Texas require employers to carry workers’ comprehension coverage. With a few exemptions, businesses in Washington State are required by law to have a workers’ comp policy that covers both part-time and full-time employees. You can face penalties, fines, or even criminal charges if you don’t adhere to your state’s law, according to the Insurance Information Institute (III).
A recent study from Stanford University found that Americans are increasingly working from home. Unfortunately, according to the International Risk Management Institute (IRMI), standard homeowners’ insurance policies typically contain business-related limitations and exclusions. For instance, standard home insurance policies often exclude detached structures if they’re used for business reasons. To cover your home-based business, you need to add a rider to your homeowners’ policy.
Product Liability Insurance
If your business manufactures products for the general market, a product liability insurance policy is essential. Even if you take extra measures to ensure your product is safe, you could still be sued because of one of your products. In such cases, product liability insurance protects your business by taking care of the legal fees, medical costs, as well as business and compensatory damages.
- Vehicle Insurance
Commercial auto insurance will protect both you and your workers when driving business-owned vehicles for business purposes. You also need commercial auto insurance if you use your personal vehicle to deliver services and goods at a fee. Commercial auto insurance is important because personal car insurance does not cover claims relating to business-owned vehicles.
In Washington, business-owned vehicles must have commercial auto insurance coverage with a minimum liability limit ranging from $10,000 to $50,000 for bodily injury and property damage per incident.
Business Interruption Insurance
Catastrophic events and disasters can disrupt your business operations leading to loss of income. Due to the disruption, you and your team may not be able to access your office space, make sales calls, or manufacture products. Business Interruption insurance, also known as business income insurance, will cover your lost income during any such interruption to normal business activities. You can use this insurance policy to pay for ongoing business expenses such as payroll, utility bills, and rent.
How Much Does Small Business Insurance Cost?
Some of the factors that determine the cost of insurance for small businesses include:
- The type of insurance of policy
- The size of business
- Your location
- Your industry
- Your revenue
- The kind of contracts you service
- Your number of your employees
- The number of claims you’ve made before
The annual cost of a standard commercial policy costs anywhere between $800 and $1,500 on average, depending on the factors mentioned above. For instance, lower deductibles, additional coverages, and extra endorsements typically mean higher insurance costs. Additionally, these costs generally vary from one insurer to another. When shopping for commercial insurance, you should compare quotes from different insurers.
Getting the right mix of business insurance policies is essential for your business’s survival. You should work with your insurance broker to meet any legal requirements and to get policies that are useful in your line of business. Moreover, you should regularly reevaluate your insurance needs because your commercial insurance needs will likely evolve. At Humble & Davenport Insurance, our experts will help you find commercial insurance policies that meet your business needs. To get started, contact us today!