Regardless of which industry you choose, there are always certain risks with running a business. An angry customer may sue you if they are dissatisfied. Or an employee may get injured on-site despite safety measures. You can’t rule out losses due to natural disasters either.
So, how can you protect your business from such unforeseen circumstances?
The best strategy is to get insurance coverage. But before buying an insurance policy, you should know about the different types of business insurance.
Types of Business Insurance for a Small Startup
Your business may be obliged by the government to purchase certain types of insurance coverage. As a rule of thumb, you should get coverage for potential losses that you can’t pay for. But if you are unsure, you can contact insurance agents in your area for a consultation.
General Liability Insurance
General liability insurance offers coverage in the event of minor property damage or bodily injuries to clients.
For example, your advertising board fell down on a visitor. Or a customer visiting the office premises got injured due to tripping on stairs. Or your employee posted a comment online that hurt the reputation of another business.
So, general liability insurance is essential for small businesses operating in any industry.
Now you may want to know how much is liability insurance for a small business. The cost of the insurance policy differs for every business. But on average, you should expect to pay $30-50 per month on liability insurance.
Major factors that influence your insurance premium include claim history, office building’s location and size, annual revenue, and number of employees.
Product Liability Insurance
Product liability insurance protects businesses that manufacture or sell physical products. Thus, manufacturers, wholesalers, distributors, and retailers need to get this type of business insurance.
In case your business suffers losses or a defective product causes injuries to customers, this insurance will take care of costs. This insurance includes legal fees, settlements for cases against your business, and medical costs for the treatment of injured customers.
Discuss with your insurance agent if this insurance is already a part of your general liability insurance. If that’s not the case, you need to get a separate policy.
The product liability insurance cost for a small business is usually around $42 per month.
Professional Liability Insurance
Professional liability insurance is suitable for businesses that offer services to clients.
Mistakes can happen when you offer professional services. And clients may suffer a financial loss or bodily injuries due to malpractice, error, or negligence of service providers. In some scenarios, it’s possible that clients may file a case with no merit. Regardless, this insurance will cover the legal cost, the cost of settlements, and licensing board penalties.
This type of insurance is also called errors and omissions insurance. The average cost of professional liability insurance is $61 per month.
Commercial Property Insurance
When it comes to business insurance types, commercial property insurance is of vital importance. It’s a must-have policy for businesses that own a significant number of assets and properties.
This insurance protects you if your commercial property such as your main office is damaged. For instance, a fire broke out that damaged the electronic equipment. Or a burst water pipe ruined carpets and furniture in the building.
Your insurance policy would typically cover several potential problems such as losses due to fire, theft, lighting, or thunderstorms.
Commercial property insurance often comes bundled with general liability insurance. But you may also be able to get it separately for around $63/month.
Home-Based Business Insurance
If you run your business from your home, then it would be a good idea to get this insurance coverage.
You may already have a home insurance policy. But a standard home insurance policy covers only up to $2,500 of business property. Thus, you need additional coverage to protect business equipment and inventory you may have stored at home.
So, whether you sell products online, work as a freelance writer, or run other businesses from your home, home-based business insurance coverage will offer you peace of mind.
Business Owner’s Policy
Instead of buying multiple insurance policies, you can opt for business owner’s insurance too. That’s because it combines multiple typical insurance coverage options in a single policy.
This policy protects your business interests against damages and lawsuits. So, it usually includes property insurance, general liability, and business interruption insurance to some extent.
You can also customize the policy to cover your unique needs such as losses due to online data breaches or protect income generated from off-site utility services. Or you can add commercial auto insurance, business income insurance, or other business insurance types to your policy.
A standard business owner’s insurance policy costs $57 per month on average.
Workers’ Compensation Insurance
Workers’ compensation insurance is extremely important for businesses of all sizes. So, the moment you hire your first employee, you should start looking into coverage options.
Even if your business complies with OSHA regulations, mishaps can happen. For example, an employee may slip and fall on the premises. With this insurance, your employees need not worry about hospital expenses due to workplace injuries. Also, it will cover the cost of workers’ compensation lawsuits, employee disability benefits, and death benefits in an event of a fatal injury.
On average, this insurance costs $70 per month for a small business.
Why Your Business Needs Insurance Coverage
Running a small business needs dedication and plenty of hard work. You invest your time and savings to make your business a success. So, it’s imperative you’d take preventive measures to protect your business from risks too.
This is when business insurance comes into play.
It can protect you from financial losses and cover the cost of liability claims, property damages, and cyberattacks. Knowing that your business is insured against potential risks, you can focus on growing your business without worries.
So, which types of insurance are you planning to buy for your small business?