For entrepreneurs, getting the proper insurance coverage for your business is a must. While you may not be legally obligated to purchase the insurance policies covered in this article, the risk involved in conducting business without insurance is too great.
With so many types of business insurance available, you might be confused about which type of coverage you require for your specific business. We’ll go over the different kinds of insurance so you can feel confident when deciding how to insure your business.
What is small business insurance?
You’re probably already familiar with some types of insurance policies from other areas of your life outside of business. For example, when you drive a car, you have to purchase auto insurance to cover things like theft or accidents. If you’ve rented an apartment or home, you’ve likely purchased tenant insurance. Small business insurance covers you against a variety of misfortunes, mistakes, or accidents that might happen while conducting business.
Just as private insurance policies protect you from legal and financial liability in the event of an accident or theft, small business insurance policies protect you from financial and legal claims that could otherwise be very serious—and costly.
There are many kinds of small business insurance, and the policies you should look into will depend on the activities your business engages in. You likely won’t need every single type of insurance, but getting the coverage that makes sense for your business will give you protection and peace of mind so you can focus on the important things.
What is general liability insurance for a small business?
Before getting into the various types of business insurance out there, it’s worth focusing on general liability insurance, since this type of policy should be purchased by every small business regardless of what you do.
General liability insurance provides protection against claims of property damage or bodily injury resulting from your business operations. This includes damage or injury caused by your products, physical location, or the daily operations of your business.
Since general liability is broad in scope, it is a must-have for any small business, no matter the business’ activities.
Types of insurance for small business
As you go through the list of types of insurance, consider them in relation to your own business activities. Some will be very relevant to your type of business, and others may not pertain to your business at this time.
While insurance policies are an additional expense you have to cover as an entrepreneur, it’s well worth factoring into your financial planning. In the long run, insurance can save your business large sums of money.
General liability insurance
General liability insurance is also referred to as commercial liability insurance and it’s one type of insurance policy that all business owners should purchase.
When comparing policies from different insurance companies, read the terms carefully and choose one that has the broadest scope. It should cover things like injury and property damage to third-parties, product liability issues, and accidental damage to a property if you are leasing or renting.
These types of claims can be the most expensive, so it’s important that your policy covers them.
Commercial property insurance
Commercial property insurance can provide coverage not only for the building you operate out of or the office you rent, but also for your inventory, equipment, computers, and other physical items you need to operate your business.
This policy will be more important for product-based businesses, and businesses that operate outside of a home office