Which Type of Insurance Coverage Does Your Small Business Need?

If you are a small business owner, you may be too overwhelmed with the day-to-day operations and forget about insurance. However, lawsuits, theft, fires, extreme weather, and other perils may force you out of business. Insurance is the best form of protection against such risks. Explore some common policies for small enterprises below.



General Liability

General liability insurance suits all small businesses, regardless of the industry. You are legally responsible if a third party like a customer or vendor is injured on your premises.

General liability insurance covers your legal costs and settlements if third parties sue you and claim that your products, services, or operations harmed them. A shopper who slips and falls in your shop can sue you for medical costs and lost wages. 

The insurance also covers the legal costs and damages if a third party sues you for property damage. For instance, a client may sue you if your employee damages their property when providing a service. 

If you run a remodeling firm, an employee can drill through a pipe and cause water damage to a homeowner's property. If you own a store and a customer breaks their laptop or smartphone during a slip and fall accident in your shop, they may sue you for property damage.

General liability coverage also protects you from advertising injuries or reputational harm arising from slander. The primary benefit of this insurance is to keep you financially stable if you face lawsuits.

However, the insurance doesn't cover the injuries you or your employees incur in the workplace. Other situations not covered by the insurance include theft, automobile accidents as you or your employees do business or employment disputes.

Workers' Compensation Insurance

Most states mandate small business owners to purchase this coverage as soon as they hire the first employee. Even when not required by law, this insurance saves the day when employees get workplace injuries.

The coverage meets the costs for an employee's medical bills, lost wages, and associated expenses after a workplace accident. You may assume that you don't require this coverage if your employees work desk jobs. However, workers can trip over objects, wires, and loose carpeting or slip on wet floors. A workplace injury lawsuit can quickly drain your resources.

The ideal coverage for your business depends on the number of workers and your previous history of accidents. Additionally, firms in high-risk industries like construction need more coverage than companies where employees mainly work at desks.

Commercial Property Insurance

This coverage suits any small company that owns physical assets. Typically, the insurance meets the repair or replacement costs in case of damage to your office or workplace, equipment, inventory, furniture, valuable documents, and outdoor fixtures like fixes. 

Your coverage can either be an "Open Perils" or "Named Policy." A named perils policy only covers the specified risks, such as theft, fire, burst pipes, or explosions. In contrast, an open perils policy covers any risk except some exclusions like floods or hurricanes.

Business Owner's Policy (BOP)

This policy combines multiple insurance products, including liability insurance, business interruption, and commercial property insurance. In addition to third-party lawsuits, the insurance covers the property damage arising from theft, vandalism, fire, and other specified risks.

Some policies include flood insurance, auto coverage, or crime coverage. Also, ask your agent for additional products to suit your company's unique needs like computer breakdown, spoilage of inventory, or forgery. Most insurers offer low limits for such kinds of inclusions.

Professional Liability Insurance

Small business proprietors in the service industry need professional liability insurance. This policy protects professionals sued by customers for mistakes or failure during service delivery. 

You may know the coverage as malpractice insurance, typical in the medical field. Other non-healthcare professionals who benefit from this insurance include real estate brokers, engineers, architects, IT experts, marketing professionals, and accountants. 

If you provide services, consumers can allege negligence, breach of contract, or violation of good faith. This policy protects your firm from costly lawsuits that can drain your budget.

Commercial Auto Insurance

You can't use your personal auto insurance policy for business uses of your vehicle. If your workers drive company vehicles that are owned, rented, or leased, purchase commercial auto insurance. This protection covers the costs of auto accidents that you or your employees cause with company vehicles. Also, get this policy if your employees use their cars for business. 

Cyber Liability Insurance

Small businesses that accept credit cards or store sensitive data like customer information on the cloud or electronic devices need cyber liability insurance. This policy covers your company from damages arising from data breaches or cyberattacks. For instance, a customer can sue you if bad actors obtain their social security card numbers after a data breach. 

Small businesses in Chicago, IL, face many risks, from cyber-attacks to fire, workplace injuries, third party injuries, and auto accidents. Fortunately, our insurance agents at Illinois Insurance Center will customize products to suit your company's needs. Call us today for affordable business insurance plans.