Small Business Insurance Plans
Going into business is an inherently risky proposition, but that doesn't mean you have to roll the dice unprotected. There are a variety of small business insurance plans available to protect you, your business and your employees from devastating financial loss. Below you will find an overview of small business insurance plans. For more information, see FindLaw's Business Liability and Insurance section.
There are as many forms of liability insurance as there are ways to be liable. Dealing with accidents and lawsuits is part of doing business, so make sure you choose the right kind of insurance to protect yourself. Here are the most common types of small business liability insurance plans:
- General liability insurance: Sometimes referred to as a Business Owners Policy (BOP), general Liability insurance plans protect your company from the infamous slip and fall cases. General liability insurance also protects you against liability if you or your employees injure someone or damage property at a customer's location. General liability insurance is typically required in your commercial lease.
- Professional liability insurance: Sometimes also referred to as Errors and Omissions insurance (E&O), professional liability insurance protects you against a customer who alleges that he or she suffered a financial loss as a result of an error or an omission in the services offered by your business.
- Workers' compensation insurance: Workers' compensation insurance provides medical and disability coverage for your employees in the event of a work-related illness or injury. In addition to providing medical coverage, the workers' compensation protects your business against a lawsuit claiming that your business' negligence was the cause of the work-related illness or injury.
- Auto liability insurance: Auto liability insurance covers damage that you or an employee causes in a business-related auto accident. It is advisable to insure any vehicles your business uses, including employees' cars if they are used for business purposes.
- Umbrella liability insurance: Sometimes referred to as Excess Liability insurance, umbrella liability insurance offers coverage for claims that exceed the amount of coverage on your general liability insurance.
- Disability insurance: Disability insurance protects you, the business owner, against some of the financial loss that may result from a serious illness or accident resulting in disability. Disability insurance does this by replacing your income for a period of time in the event of a serious accident or illness.
While liability insurance generally protects you and your employees, property insurance protects your physical place of business against many different types of damage and loss. A good property insurance policy should cover all forms of property in your business including:
- The building itself
- Office furniture
- Inventory and supplies
- Computers and other electronics
- Equipment and machinery
- Property fixtures such as lights and carpets
- Personal property kept at your business
Like every form of insurance, coverage can vary greatly from the bare minimum to extensive and detailed coverage. The type of coverage you need may be required under your commercial lease, or at least a bare minimum may be established by the lease.
Basic forms of property insurance will usually protect you from damage by fire, smoke, water sprinkler systems, explosions, riots and vandalism, with broader coverage including additional protection for broken windows, falling objects and water damage. Theft is not covered under the most basic forms of property insurance, and is generally only offered in more detailed, and thus expensive, property insurance packages.
What is Covered?
Always carefully check a policy for exactly what is covered, and don't assume anything is covered if it is not explicitly stated. In addition to coverage, always check for liability limits, deductibles and co-pays as well as examining what the process for resolving a claim is.
Finally, examine how an insurance policy determines what the value of any property you claim is. Some plans will reimburse you for the cost of replacing the property (guaranteed replacement cost), while others will only reimburse you for the current (depreciated) value of the property.
Shopping for Business Insurance
Many small businesses use insurance brokers to find the type of insurance for themselves, but an increasingly popular option is for business owners to search for policies on their own over the Internet. If you choose to use a broker, make sure the broker understands your business' particular needs since most brokers are paid commissions by the insurance companies and might not have your business' best interests at heart.
Legal Guidance for Insurance Policies
Be aware that there are many specific types of insurance tailored for very particular types of business. These business-specific insurance policies may be a much better fit for your business than a more general one-size-fits-all insurance package. Speak to a business and commercial law attorney today to explore what kind of insurance your business will need.