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No matter what kind of business you own, you are subject to a number of liabilities and risk. Small business insurance helps small businesses reduce some of these risks and keep the business growing when unforeseen events can put your company’s survival in jeopardy. The following ways should be kept in mind when you shop for small business insurance.
Types of Small Business Insurance
The federal government requires businesses with employees to have unemployment, workers’ compensation, and disability insurance. Unemployment insurance (UI) is a federally guided program administered and operated by the state. Each state determines its own UI rate, and employers are required to contribute a percentage of employee wages to the state’s UI fund.
Once you have those three types of insurance, the others depend on what you need based on your industry, the work performed, physical location, property and equipment, employees and customers, and intellectual property.
The costs vary depending on several factors, including the type of business you own. Most small business insurance policies fall into the following categories:
- General liability insurance. This covers financial loss due to property damage, body injury, medical expenses, court costs associated with lawsuits, libel, and slander.
- Product liability insurance. Important for manufacturers, wholesalers, retailers, and distributors of products that may cause harm due to product defects.
- Commercial property insurance. Important to cover property and physical assets in case of damage such as fire or vandalism.
- Business owner’s policy (BOP). You might be able to bundle a general liability policy with a commercial property insurance.
Cyber Liability Insurance
Cyber liability insurance covers the costs when your business experiences data breach, viruses, or cyberattack. The policy also covers costs associated with legal claims resulting from the breach. If your business collects and stores sensitive data in the cloud or on electronic devices, you should consider buying cyber liability insurance. If your business operation is disrupted due to a data security breach, cyber liability insurance can be crucial to recovery.
Business Interruption Insurance
Most businesses have a plan for disasters, such as fire and power outages or natural disasters such as tornadoes, hurricanes, or earthquakes. No matter what type of disaster it is, small businesses are impacted more than large ones that have the financial resources to bounce back.
Business interruption policies are typically used by small to mid-sized businesses and include property, liability, and business income coverage. Covered disasters may include damages from fire, wind, falling objects, lightning, and even civil unrest.
The cost of this type of insurance varies by industry, property value, and business revenue. The more you have to lose the higher the cost will be. The security in knowing your business can survive when the universe throws you something unexpected might be worth the price you pay.
Employer Insurance Considerations
If you have employees, you need to know about employee insurance. Offering health insurance makes your company more attractive to prospective talent. For current workers, a health care benefit helps retain talent, reduce absenteeism, boost employee satisfaction, and benefits your business with tax incentives.
The following options are available for small business employees:
- Individual Coverage HRA (ICHRA)
- Qualified small employer HRA (QSEHRA)
- Group coverage HRAs
- Traditional group health insurance plan
- Self-funded health insurance
Review Carefully
You need to review your business insurance policies and make sure that they are not missing anything important. Stay on top of the details in your small business insurance policies to give you a peace of mind and save your business.
