Launching a new business is rewarding but intimidating, and there are a lot of risks involved to understand and consider. Some of those potential risks are liabilities associated with running your new small or home-based business.
Every business is subject to risks.
But the nature of your business, as well as its location, can make some factors more pertinent than others.
Before opening your business, you must evaluate the most common risks within your industry and prepare for any issues that could occur by purchasing the right insurance coverage.
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Natural Disasters
Unfortunately, natural disasters such as hurricanes, flooding, and fires occur frequently and result in interruption of regular day-to-day business practices.
When a natural disaster shuts down your business temporarily, business insurance can help.
This coverage often replaces the finances lost due to a disaster and can include temporarily relocating your business, payroll, taxes, and loan payments.
In areas where property damage is more likely, business interruption service is essential for keeping your business on track even during some of the worst circumstances.
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Theft
Unfortunately, it’s not uncommon for a business to experience theft or vandalism.
If a theft occurs, commercial property insurance or a business owner’s policy (BOP) can protect your business.
Commercial property insurance will reimburse your company for supplies, inventory, and even furnishings stolen from your property.
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Employee Injuries
Every business is susceptible to employee injuries. However, some industries are naturally at greater risk when it comes to the safety of their workers.
For instance, industries such as construction, manufacturing, and agriculture raise the chances of employee risks for job-related injuries.
Workers’ compensation insurance provides for ill or injured employees while also protecting their employers. Insurance companies will simply look up the class codes in the National Council on Compensation Insurance (NCCI) codes to determine the cost.
Required by most states for businesses with one or more employees, workers’ comp can cover lost wages, medical expenses, and other recovery costs for individuals who suffer an illness or injury related to their job.
Be sure to check your state’s legal requirements regarding workers’ compensation coverage minimums.
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Damage to Business Property
Disasters such as flooding or fire aren’t the only ways a business’s property can be damaged.
Your protected property includes the building in which your company operates and all of the possessions you use to conduct your business.
Commercial property insurance will cover losses due to loss or damage to your property, including furnishings, computers, printers, and other business equipment.
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Defective Products
Businesses that make or sell products are responsible for damages that occur due to the design, manufacturing, marketing, or use of their products.
Should a product harm a consumer, it is highly likely they will file a product liability claim against you or your business.
Facing a product liability lawsuit is an expensive and stressful experience.
Even if arbitration or the court rules in your favor, the costs of legal fees could severely deplete your company’s finances.
Product liability insurance covers these legal expenses and, in some circumstances, covers medical costs and business damages.
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Copyright Infringement
Advertising injury coverage, which is included in commercial general liability policies, deals with claims of invasion of privacy, libel, slander, or copyright infringement.
General liability insurance can help pay for the resources necessary to defend oneself against a claim or the costs of a negative judgment found through arbitration or the court system.
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Errors, Negligence, or Malpractice Lawsuits
Businesses that provide a service or are professional advice-giving agencies such as financial planners, doctors, accountants, and wedding planners should have errors and omissions (E&O) insurance.
A type of professional liability insurance, this coverage protects companies and their professionals from inadequate work or negligent action claims made by clients.
It will often cover the costs of the claim’s legal fees and financial losses.
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Auto Accidents
Businesses that rely on vehicles to transport products, visit clients, or for other business purposes could face liabilities if there is an accident.
Personal auto policies do not fully cover car accident damages and injuries associated with a business vehicle.
Commercial auto insurance will cover you and your employee for the losses that result from a company car accident.
The Cost of Small or Home-based Business Insurance
Although the costs of not having the right coverage can far outweigh the expense of an insurance policy, you may still be wary about the potential costs of adding coverage to your current policies.
So, how much is small business insurance?
The best way to find the right coverage at the right price is to investigate your insurance options.
Compare three to five top-rated companies, clearly identify the coverage options your company needs, and ask about qualifying discounts.
Most business owners opt for bundled insurance packages called the business owner’s policies (BOP).
This popular insurance coverage can help you save money while conveniently bundling the plans your company needs.
