7 Types of Insurance Every Small Business Owner Should have

Research has shown that at least a fifth of new startups never make it beyond the first year of operation. And, if they do, half of these businesses will fail before they celebrate their fifth milestone. Indeed, the early years of a company are quite uncertain. And, if you are a small business, it’s not always easy to compete with the big fish. You have too many odds against you. That’s why; every small business owner should have some minimum insurance cover for the business. It comes in handy to give you peace of mind as you concentrate on growing your core business. So, what type of insurance is essential for your line of business?

Group insurance

Life Insurance

 Small business owners carry the mantle of their business wherever they go. That’s why the sudden death of the owner may also mean the end of their business. Then, what happens when the business owner passes on. The company can go bankrupt overnight, leaving family members with lots of debts. 

But, if the entrepreneur has an active life insurance policy at his time of death, it’s a sigh of relief for his beneficiaries. Life insurance cover will pay the beneficiaries the agreed amount and relieve their financial burden due to death.

Professional Liability Insurance (PLI) 

Is your business a consultancy firm in the medical, accounting, or legal professions? Consider getting professional liability insurance, or PLI. Indeed, PLI is necessary to cushion professionals from claims arising due to their negligence, malpractice, or misrepresentation on their part. Still, this cover excludes crime-related claims or cyber liabilities. Other professionals that need PLI cover include teachers, therapists, counselors, insurance agents, and contractors. For each of the sectors, the PLI policy retails in a unique name. Plus, it includes custom clauses for particular professionals. 

Property Insurance

 Small business owners get physical assets to ease their service offerings. But, such property is subject to risks like damage from fire, theft, or floods. Then, it is prudent to take a property insurance policy for your tangible assets. Note that some risks are excluded from the property insurance policy. For example, mass-destruction dangers like terrorism and political violence. Do you operate in an area susceptible to such threats? Then, increase your premium to capture these unique risks.   

Worker’s Compensation Insurance

The worker’s compensation insurance is a mandatory policy for employers. It protects employees from damages due to injury while in their line of duty. The law requires that the employee or his beneficiaries receive compensation. Then, the worker’s comp will cater to medical expenses, funeral or cremation expenses, and long term disability costs. As a small business owner, you should note that many conditions qualify for disability. Therefore, it doesn’t matter where the employee gets a physical disability or not; you as the employer must ensure your employee is compensated.

Commercial Auto Insurance

 A small business owner must take up auto insurance for all official vehicles. This way, he cushions his employees from damages in the event of an accident. The employees or beneficiaries will receive full compensation for the loss. This compensation caters for damage to personal property, medical expenses, and funeral expenses. Often, small startups allow their employees to use their private vehicles at work. Then, such an employer must take up the hired non-owned policy to include such vehicles.  

Cyber Breach Liability 

Today’s small business owners take advantage of the internet to widen their reach. In turn, such businesses are prone to cybercrimes and fraud. In particular, identity theft, credit card fraud, and information leak is a significant threat to the small business owner. To cushion their business, the entrepreneur must take the data breach policy. It protects against losses from such risks.

Business Owner’s Insurance (BOP)

 A small business owner wants to focus on growing his business. He looks for less administrative solutions. That’s why, when it comes to insurance, it is wise to pick fewer plans that cater for all the risks. Plus, it is cheap to pay for fewer premiums and still get the same cover from many policies. Indeed, that is what the business owner’s insurance is all about. BOP consolidates most threats facing the small startup in one plan. Then, the BOP cover cushions most risks, including those related to property, motor vehicles, business interruptions, criminal liability, and professional negligence. Further, the entrepreneur can get a custom BOP cover with only those risks that are relevant to his business.  

The small business owner must always seek ways to mitigate business risks. It is the only way his business can be sustainable. Hence, the right choice of insurance covers provides that much-needed peace of mind for growing his business. Thus, once one decides on the appropriate protection, he should consult a reliable insurer and discuss his options.

About Mohit Tater

Mohit is the co-founder and editor of Entrepreneurship Life, a place where entrepreneurs, start-ups, and business owners can find wide ranging information, advice, resources, and tools for starting, running, and growing their businesses.

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