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The Basics of Business Insurance for Small Business Owners

The Basics of Business Insurance for Small Business Owners

As a small business owner, you must protect your company’s assets with adequate insurance. Most insurance companies recommend property, liability, auto, and workers’ compensation insurance for business owners, but you may need additional coverage. 

Insurance for Real Property and Physical Assets

Property insurance coverage is important if your company owns any real estate or physical assets. The correct property insurance covers damage from natural disasters like storms and hail, but it also protects your assets from theft, vandalism, and fire.

Your insurance policy must include your commercial property, but you also need to think about your equipment, machinery, inventory, and furniture. It costs thousands of dollars to furnish a small office with desks and computers. If your business requires specialized equipment, you should add it to your insurance policy. 

Liability Coverage for Your Business

As a business owner, you can become the target of a lawsuit. A legal claim made against you doesn’t mean you’re at fault or responsible, but you need money to hire a legal team to defend your company. Liability insurance can help you pay for an attorney, as well as court fees and other costs associated with defending a claim.

If your business is found liable for damages, your liability policy will help you pay for that, too. Without liability insurance, a legal claim could spell the end of your business and lead to bankruptcy. Liability insurance may even be a requirement to partner with other business owners or secure a contract with another organization. 

Commercial Auto Insurance Policy

If your business owns company vehicles, you must have a commercial auto insurance policy. Make sure the policy covers every vehicle in your fleet and lists all the employees who may end up driving those vehicles. It can be time-consuming to update these coverages, but a commercial auto insurance policy protects your business assets.

Workers’ Compensation Insurance

If you have employees, you’re legally required to carry workers’ compensation insurance. Workers’ compensation insurance protects your employees if they get injured at work, even if the injury is a result of employee negligence. The policy helps cover medical costs and protects you from lawsuits. 

Other Types of Commercial Insurance 

Your business may need other types of commercial insurance, including:

  • Errors and omissions insurance
  • Key employee insurance
  • Management liability
  • Umbrella coverage

Errors and omissions insurance is important for service professionals whose actions or inactions can cause their clients financial harm. Examples include lawyers and accountants. Key employee insurance protects your business from financial loss if a key employee is no longer able to work at the company.

Umbrella coverage is a great way to add another layer of protection for your company assets. Modern umbrella coverage is a general liability policy that keeps your assets safe in case of potential lawsuits or legal claims.

Every business owner should have adequate insurance to protect their company assets. Accidents can happen anywhere and anytime, but the right insurance coverage can help you mitigate the damage. 


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