How Do I Know What Insurance Coverage My Business Needs?
As you assemble your limited liability company, you will eventually confront the all-important question of business insurance. Of course, you want to keep your company protected, but you also don’t want to spend too much time, effort and money to acquire coverage that just doesn’t apply to your business.
Knowing what you do and do not need can be a bit tricky though. Depending on the nature of your business, you want to carefully consider what safeguards you need to have in place before you officially launch your company. Let’s discuss first how you can get that process started.
What Insurance Does Your Business Need?
- Evaluate your business: As you might have suspected, the first thing to do when deciding on business insurance is to evaluate your company needs. The nature of your business and industry should naturally raise questions relating to the kinds of liability that might arise if something were to go wrong. What accidents might occur? How could your company be held liable? If you handle sensitive data, then you might need data breach insurance, for instance, or commercial automobile coverage if you have company cars.
- Turn to a professional: Once you have a general idea of what types of insurance plans might apply to your company, then it’s time to seek out a licensed insurance agent who can facilitate your purchase of these policies. Oftentimes, these commercial agents will be able to identify coverage you had never even considered adding to your arsenal — areas in which your company might have otherwise been left vulnerable. Don’t attempt to design your own insurance plan independently, as you need to ensure that your protection is as comprehensive as possible.
- Explore your options: The costs and benefits of the various plans out there will vary wildly, and you want to be sure your investment is worth it before you sign on the dotted line. Speak to a few different agents and compare a variety of insurance plans so that you can identify the ones that best suit the specific needs of your business at this time.
- Stay on top of it: Of course, those needs change and evolve over time. So it’s critical that you continue readdressing your insurance needs every single year. Perhaps your business has expanded into another service area or otherwise taken on an operational capacity that opens up new opportunities for legal action to emerge. To ensure that you’re not left exposed, you need to be vigilant and update your insurance coverage as necessary.
Coverage to Consider
We already mentioned how widespread your options are when it comes time to pick small business insurance. Let’s briefly discuss some of the most common types of business insurance out there.
- Professional liability insurance: Also known as errors and omissions (E&O) insurance, this popular type of coverage protects your business from negligence claims. This would cover, for example, harm or damage caused by an error on your end. Professional liability insurance also has many variations, and you’ll likely need your own customized plan catered to your company’s needs.
- Property insurance: If your business leases or owns any real estate space, you definitely need property insurance. This policy typically covers events like storms, fires or thefts. It’s the best way to protect any inventory or equipment that you may have at your physical location.
- Workers’ compensation insurance: This is an absolute must if you have any employees working for you. Such a policy covers medical treatment, disability and death benefits if an accident causes an employee to suffer an injury on the job. Even if you don’t think you need this coverage, you still do.
- Home-based businesses: Commercial property insurance partly covers your business if it is based in your own home, but you may still need other insurance to be adequately covered. And no, homeowner’s policies don’t extend to home-based businesses. Reach out to your insurance agent to decide together if you need additional protections for your inventory and/or equipment.
- Product liability insurance: Your business may or may not center on product manufacturing, but if it does, here’s another insurance policy to add to your list. All of the product label warnings in the world don’t amount to the protection that one of these plans can provide. If you have a product out there, you need to be covered in case it inflicts any kind of damage on consumers.
- Vehicle insurance: If you manage a fleet of commercial vehicles or even have a single company car, you’ll need vehicle insurance. If your employees are using their own vehicles for the purposes of your business, that is covered by their own personal insurance. However, if this isn’t the case, you need to be prepared if an accident involving your vehicles does happen.
- Business interruption insurance: Finally, you need to ensure that you’re not held liable if a natural disaster or other catastrophe strikes your business, rendering it impossible for you to stay in operation. This policy will compensate you for lost income during this period, especially if your business depends on a physical location. Planning the future of your company includes anticipating how to offset such financial losses.
Protecting Your Future
The goal of any insurance coverage is not only legal protection against any mishaps that may occur during the natural course of conducting business, but also the peace of mind that you acquire along with it.
After all, such details are absolutely paramount when it comes to ensuring your business has a long and successful life. That’s precisely what we specialize in at Incfile.