Small business operations can be risky. From having one employee to running a service company that offers a variety of services, your small business can operate in a variety of industries, which means there are many risks you need to account for. Fortunately, small business insurance is readily available at affordable rates with some minor adjustments to your business structure and operating procedures. If you’re just starting or are working on expanding your small business, get ready because reading about small business insurance isn’t optional. You need it! Here are five types of small business insurance that you must have as a self-employed person or as the owner of a new venture.
General Business Insurance
A basic form of business insurance is to have general liability insurance. This protects you and your assets against lawsuits for unintentional damage to others or property. Because the US has a “no-fault” system for liability claims, having general liability insurance is critical for many types of businesses. While it’s true that liability insurance is normally expensive, it’s also fairly straightforward to calculate the cost. This is because your annual expense for general liability insurance is going to be your annual profit. If you’re just starting, you don’t have the profits yet to cover the cost of this insurance.
Professional Risk Insurance
Professional risk insurance is what protects your business against claims such as professional malpractice, contractual breaches, and errors and omissions. For example, you have a contract with a client to deliver a service or a product on a certain date. But, the terms of the contract aren’t clear. So, you call the client to clarify what the date means for them. But, the client is upset and says you haven’t delivered the service yet. Did you mess up? Did the client communicate their expectations well? Did the client misunderstand something you said? Did you deliver the service and later find out that the client didn’t understand what they were getting? Regardless of the outcome of this scenario, there’s a chance you’ll be sued. So, that’s where professional risk insurance comes into the picture. This type of insurance protects you against lawsuits.
Employee Benefit Insurance
One of the things that people often forget about when they’re starting a business is the benefits of working for themselves. While benefits like health insurance are usually offered by your employer, they’re not usually a part of your small business. The best way to cover yourself against health-related expenses, whether your own or your employees, is to take out employee benefits insurance. If one of your employees is sick and can’t come to work for a few days, you don’t want to be out of business. Because of this, you might end up having to pay the employee’s salary, deduct the amount of time the employee is absent, and pay for the missed work. That’s a lot of financial burdens if you don’t have employee benefits insurance.
Another type of insurance that’s an important part of small business operations is on-demand insurance. This type of insurance primarily exists in a digital format that makes it easy to access at any time. The main purpose of this type of insurance is flexibility. With an on-demand insurance policy, the insured can choose to pay only when they feel they need the protection.
Co-operative insurance is a type of insurance that’s particularly important for co-operatives. Co-operative insurance helps you protect your members or depositors if a bank or other financial institution forecloses on your business. This may happen if you don’t make your payments on time. If you have a business that has customers who’ve deposited money with you, you need to know about cooperative insurance. Without it, your customers will lose the money they put into your business. Cooperative insurance protects your customers by offering them financial protection in case your business fails. This way, customers are protected, but you aren’t penalized because you did not fail.
If you’re just starting or you want to expand your business, you need to have the right kind of insurance. General business insurance protects you against lawsuits and other claims. Professional risk insurance protects your assets against product liability claims and errors and omissions claims. Employee benefits insurance protects you and your employees against health-related expenses. And lastly, cooperative insurance protects your members against bank foreclosures.