Insurances that small business owners should seriously consider
Small businesses general tend to “make do and mend” as my gran used to say – they run on such tight budgets that they watch every penny and sometimes they try to get away with getting the bare minimum in the way of insurances.
However this can prove to be a “false economy” as by trying to save a few pound by not taking out an insurance, you could be setting yourself up for more financial stress later on. The following list comprises several of the commercial insurances that are commonly recommended to small business owners, but it is recommended that you speak to your specialist commercial insurance broker or someone like BIBA to get a package that is tailored to your needs.
- General Liability Insurance: This one really is a must for every business, even if your business is a home-based “cottage industry” it needs to have liability insurance. This type of policy provides both defence and damages if you, one of your employees or one of your products or services cause or are alleged to have caused “Bodily Injury or Property Damage” to a third party.
- Property Insurance: Another fairly obvious must for anyone that owns their own building or has business personal property, including office equipment, computers, inventory or tools. You should consider purchasing a policy that will protect you if you have a fire, vandalism, theft, smoke damage, Flood or wind damage etc. You may also want to consider business interruption/loss of earning insurance as part of this policy to protect your earnings if the business is unable to operate.
- Business owner’s policy (BOP): This is a business owners policy package that contains all required coverage a business owner would need. Often, BOP’s will include business interruption insurance, property insurance, vehicle coverage, liability insurance, and crime insurance . Based on your company’s specific needs, you can alter what is included in a BOP. Typically, a business owner will save money by choosing a BOP because the bundle of services often costs less than the total cost of all the individual coverage’s.
- Commercial Auto Insurance: Commercial auto insurance protects a company’s vehicles. You can protect vehicles that carry employees, products or equipment. With commercial auto insurance you can insure your work cars, SUVs, vans and trucks from damage and collisions. If you do not have company vehicles, but employees drive their own cars on company business you should have non-owned auto liability to protect the company in case the employee does not have insurance or has inadequate coverage. Many times the non-owned can be added to the BOP policy.
- Worker’s Compensation: Worker’s compensation provides insurance to employees who are injured on the job. This type of insurance provides wage replacement and medical benefits to those who are injured while working. As a business owner, it is very important to have worker’s compensation insurance because it protects yourself and your company from legal complications and injuries at work are one of the most common forms of injury.
- Professional Liability Insurance: The policy provides defence and damages for failure to or improperly rendering professional services. Your general liability policy does not provide this protection, so it is important to understand the difference. Professional liability insurance is applicable for any professional firm including lawyers, accountants, consultants, notaries, real estate agents, insurance agents, hair salons and technology providers to name a few.
- Directors and Officers Insurance: this type of insurance protects the directors and officers of a company against their actions that affect the profitability or operations of the company. If a director or officer of your company, as a direct result of their actions on the job, finds him or herself in a legal situation, this type of insurance can cover costs or damages lost as a result of a lawsuit.
- Data Breach: If the business stores sensitive or non-public information about employees or clients on their computers, servers or in paper files they are responsible for protecting that information. If a breach occurs either electronically or from a paper file a Data Breach policy will provide protection against the loss.
- Life Insurance: Life insurance protects an individual against death. If you have life insurance, the insurer pays a certain amount of money to a beneficiary upon your death. You pay a premium in exchange for the payment of benefits to the beneficiary. This type of insurance is very important because it allows for peace of mind. Having life insurance allows you to know that your loved ones will not be burdened financially upon your death.
The sorts of insurances that you need (some as highlighted above are more important than others) will depend greatly on the type of business you are in, for example – you may not require Professional Liability insurance if you are a shop owner. If you are unsure what insurances you require then do some research, ask other businesses of the same type what insurances they have, talk to several insurance brokers to get information and quotes for the needed insurances, or contact someone like BIBA (British Insurance Brokers Association) who will be able to put you in touch with the relevant people to help ensure you are correctly covered for your type of business.