Insurance is an important concept for all adults. Whether it’s insurance for your home, health, car, travel, or even life, its importance is significant as it protects you from the costs and damage that emerge from unexpected incidents. For this reason, you could be wondering if you need small business insurance.
Is small business insurance essential?
There are certain businesses that are evidently more risky than others. For instance, a business owner that provides skydiving services is more aware of liability issues. However, those in fields that are considered to be safer, such as app developers, graphic designers, and others alike would consider themselves less likely to experience physical harm while at the job.
Regardless of one’s industry, things can go south. For example, a writer could be accused of plagiarism, while an app developer could be sued for patent infringement. It is, therefore, your responsibility to ensure that you, your business, and your income are protected using small business insurance.
A comprehensive guide to liability and your business structure
As a small business owner, your business structure affects your liability.
• Sole proprietor
If you fall under this category or have a partnership, you and your business are considered a single entity. Therefore, if your business is being sued, you are equally liable for any payments necessary.
• Limited Liability Company (LLC)
The LLC business structure allows you to separate your personal finances from your business. This means that your business is held responsible for all liabilities and debts.
Factors that can declare you liable for your business’ shortcomings
Regardless of running a sole proprietorship business or LLC, there are a number of aspects that can cause personal liability.
• Operating an illegal business or committing a crime. Once you break the law, an LLC or corporation does not have the power to protect you.
• Personally guarantee a loan for your business. Before your business acquires its own business credit, most banks require a personal guarantee for you to access loans.
• Failure to operate business as a separate entity. In case you mix up your business and personal finances, your corporate shield may not be strong enough to protect your personal assets.
• Performing actions that cause harm to others. Individuals who operate in various professions, such as doctors, take out a professional liability insurance policy to shield against claims of negligence or malpractice.
Which small business insurance do you need?
Different types of small business insurance meet different needs based on the business type in question and risk tolerance.
- General liability insurance
Any business can significantly benefit from this type of insurance coverage as it provides protection that covers the business against accidents, injuries, and negligence claims. Additionally, it can also cover damages caused on the business premises or caused by you or an employee. It can also cover attorney fees, medical costs, and claims of copyright infringement, false advertising, or slander.
Your type of business is the sole determinant of the amount of coverage you require. This is because if you are more exposed to getting injured or causing damage in your profession, you need more coverage as compared to someone who is less exposed. As this plan outlines the maximum amount payable against a claim by the insurance company, you need to assess if the amount provided is reasonable considering the level of risk.
- Professional liability insurance
This type of insurance is most suitable for businesses that offer services such as lawyers, consultants, and accountants. It is also known as errors and omissions (E&O) insurance and protects businesses against claims of negligence that emerge from failure to deliver expected results or mistakes.
As a service provider, it is important that you understand that general liability insurance does not protect you against negligence and malpractice claims. Therefore, if a client sues you, this coverage should be able to cover you.
- Commercial property insurance
Ownership or leasing of property used to facilitate business operations will need property insurance. This cover caters to damages or losses caused by elements such as fire, smoke, and vandalism, among others.
- Commercial auto insurance
This insurance helps cover the costs of an accident caused using a vehicle used for business operations. Some of the costs it will cover are for damaged property and medical expenses of any parties involved.
- Homeowner’s insurance
This insurance type is for people that run home-based businesses. If you failed to disclose that you run your business from home, your basic home insurance may choose not to cover any losses associated with your business. To obtain the coverage you need, find an in-house business policy that will cover the equipment and liability of people entering and leaving your home.
- Data breach insurance
A data breach policy is highly recommended for businesses that deal with sensitive or highly confidential information about clients to protect you from both electronic and physical breaches. Since big companies are implementing more sophisticated security measures to protect their data, hackers find it hard to get through to them, shifting their focus to smaller businesses. To avoid undergoing all the damages a hack can cause to your business, this is modern-day coverage that you should truly consider.
- Workers’ compensation insurance
Employers require this cover which handles illnesses or injuries acquired by employees while at work. This insurance policy covers lost wages, medical costs, and disability benefits. In case an employee or their family sues you, this cover caters to your legal expenses.
There are other small business insurance covers such as business interruption, commercial umbrella, business owner’s policy, and employment practices liability insurance, among many others. To make the best selection for your business, it is essential to be well aware of your needs so as to identify the most appropriate cover for you. This means considering the possibilities of different kinds of horrifying incidents, as this is the best way to find out which type of protection will be best for your business. This may be an uncomfortable experience, but the more protected you feel, the more confident you will be when handling these situations. Find out the best small business insurance for you and confidently drive your business to success.
Insurance is an important concept for all adults. Whether it’s insurance for your home, health, car, travel, or even life, its importance is significant as it protects you from the costs and damage that emerge from unexpected incidents. For this reason, you could be wondering if you need small business insurance.
Is small business insurance essential?
There are certain businesses that are evidently more risky than others. For instance, a business owner that provides skydiving services is more aware of liability issues. However, those in fields that are considered to be safer, such as app developers, graphic designers, and others alike would consider themselves less likely to experience physical harm while at the job.
Regardless of one’s industry, things can go south. For example, a writer could be accused of plagiarism, while an app developer could be sued for patent infringement. It is, therefore, your responsibility to ensure that you, your business, and your income are protected using small business insurance.
A comprehensive guide to liability and your business structure
As a small business owner, your business structure affects your liability.
• Sole proprietor
If you fall under this category or have a partnership, you and your business are considered a single entity. Therefore, if your business is being sued, you are equally liable for any payments necessary.
• Limited Liability Company (LLC)
The LLC business structure allows you to separate your personal finances from your business. This means that your business is held responsible for all liabilities and debts.
Factors that can declare you liable for your business’ shortcomings
Regardless of running a sole proprietorship business or LLC, there are a number of aspects that can cause personal liability.
• Operating an illegal business or committing a crime. Once you break the law, an LLC or corporation does not have the power to protect you.
• Personally guarantee a loan for your business. Before your business acquires its own business credit, most banks require a personal guarantee for you to access loans.
• Failure to operate business as a separate entity. In case you mix up your business and personal finances, your corporate shield may not be strong enough to protect your personal assets.
• Performing actions that cause harm to others. Individuals who operate in various professions, such as doctors, take out a professional liability insurance policy to shield against claims of negligence or malpractice.
Which small business insurance do you need?
Different types of small business insurance meet different needs based on the business type in question and risk tolerance.
- General liability insurance
Any business can significantly benefit from this type of insurance coverage as it provides protection that covers the business against accidents, injuries, and negligence claims. Additionally, it can also cover damages caused on the business premises or caused by you or an employee. It can also cover attorney fees, medical costs, and claims of copyright infringement, false advertising, or slander.
Your type of business is the sole determinant of the amount of coverage you require. This is because if you are more exposed to getting injured or causing damage in your profession, you need more coverage as compared to someone who is less exposed. As this plan outlines the maximum amount payable against a claim by the insurance company, you need to assess if the amount provided is reasonable considering the level of risk.
- Professional liability insurance
This type of insurance is most suitable for businesses that offer services such as lawyers, consultants, and accountants. It is also known as errors and omissions (E&O) insurance and protects businesses against claims of negligence that emerge from failure to deliver expected results or mistakes.
As a service provider, it is important that you understand that general liability insurance does not protect you against negligence and malpractice claims. Therefore, if a client sues you, this coverage should be able to cover you.
- Commercial property insurance
Ownership or leasing of property used to facilitate business operations will need property insurance. This cover caters to damages or losses caused by elements such as fire, smoke, and vandalism, among others.
- Commercial auto insurance
This insurance helps cover the costs of an accident caused using a vehicle used for business operations. Some of the costs it will cover are for damaged property and medical expenses of any parties involved.
- Homeowner’s insurance
This insurance type is for people that run home-based businesses. If you failed to disclose that you run your business from home, your basic home insurance may choose not to cover any losses associated with your business. To obtain the coverage you need, find an in-house business policy that will cover the equipment and liability of people entering and leaving your home.
- Data breach insurance
A data breach policy is highly recommended for businesses that deal with sensitive or highly confidential information about clients to protect you from both electronic and physical breaches. Since big companies are implementing more sophisticated security measures to protect their data, hackers find it hard to get through to them, shifting their focus to smaller businesses. To avoid undergoing all the damages a hack can cause to your business, this is modern-day coverage that you should truly consider.
- Workers’ compensation insurance
Employers require this cover which handles illnesses or injuries acquired by employees while at work. This insurance policy covers lost wages, medical costs, and disability benefits. In case an employee or their family sues you, this cover caters to your legal expenses.
There are other small business insurance covers such as business interruption, commercial umbrella, business owner’s policy, and employment practices liability insurance, among many others. To make the best selection for your business, it is essential to be well aware of your needs so as to identify the most appropriate cover for you. This means considering the possibilities of different kinds of horrifying incidents, as this is the best way to find out which type of protection will be best for your business. This may be an uncomfortable experience, but the more protected you feel, the more confident you will be when handling these situations. Find out the best small business insurance for you and confidently drive your business to success.
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