Why do small businesses need insurance? The answer is protection. The right insurance coverage helps protect your business and acts as a safeguard against potential risks and losses across a wide range of scenarios including bodily injuries and property damage.
How do you know which insurance policies your business needs? Generally, coverage tends to vary depending on your industry. However, there are several types of business insurance policies that most businesses will require to safely operate. Let’s review these basic coverage recommendations.
1. Business Owner’s Policy (BOP)
A business owner’s policy (BOP) is a combination of three insurance policies: general liability, commercial property and business income.
This insurance coverage is popular with business owners. It is also customizable. For example, you may additionally include a professional liability insurance policy in your BOP coverage.
2. Workers’ Compensation Insurance
Workers’ compensation is a compensation program administered by the U.S. Department of Labor. It is a legal insurance requirement in most states for businesses with employees.
If an employee suffers a work-related injury or gets sick from their job, they will receive benefits through workers’ compensation.
3. State Unemployment Insurance (SUI)
The Federal-State Unemployment Insurance program was established for eligible workers by the U.S. Department of Labor. Should these workers become unemployed through no fault of their own, such as through layoffs or due to health issues, they may receive temporary financial assistance through state unemployment insurance (SUI).
If an employer plans to hire and pay employees more than $300 in wages, they must file for state unemployment insurance. SUI is an employer-funded tax. Employers pay unemployment taxes on the wages of their employees which eligible workers then receive as benefits. Employers must submit a tax report to the state each quarter after filing for SUI.
4. Cyber Insurance
This is also referred to as data breach insurance. A cyber insurance policy helps protect businesses from cyber attacks, data breaches and loss of data, and malware attacks.
This coverage can help small businesses pay costs that allow them to notify individuals, like customers, impacted by the data breach. It also assists in paying for monitoring services for identity theft. Businesses that conduct transactions primarily online will need to invest in cyber insurance to ensure the safety of this information.
5. Key Person Insurance
This is also referred to as life insurance.
If the business owner or a critical employee is unable to work, becomes disabled, or suffers an untimely demise, key person insurance helps financially protect the business and its continuity moving forward. This policy also covers expenses in finding a replacement for the business.
6. Commercial Umbrella Insurance
Small businesses may be impacted by even more unforeseen circumstances that are not covered through their standard policies.
The best approach is to apply for extra coverage through commercial umbrella insurance. This policy helps extend coverage limits as needed on various insurance policies.
Do I need any other type of insurance?
The answer may be yes. Here are a few additional insurance policies where your business may require coverage:
There are even more types of insurance available for small businesses across all industries. Speak with an insurance agent to learn more about insurance coverage available for your small business. Then, choose the right coverage options and enjoy the peace of mind in knowing your small business has the protection it needs.
This content was originally published here.