Do I Need Insurance for My Business? The short answer is yes; you absolutely need insurance for your business. Your business is the product of your blood, sweat and tears. It may be a new enterprise or a booming and established business but either way, it is important that you protect what you have worked to build. Doing business without insurance leaves you and your company open to a world of potential problems.
When looking at insurance for your business you have lots of options and things to consider. As a business owner you have a lot to protect. Just like no two businesses are exactly the same, no two businesses will have the exact same insurance needs. Some insurance offerings are appropriate for a business based on size or industry. It is important to talk to an experienced agent that can help you cover all your business insurance needs without overpaying for insurance you don’t need. There are many different types of insurance offerings out there for you to consider.
Property insurance: Property insurance typically covers losses and damages to real or personal property. You can purchase additional insurance that covers specific things such as debris removal and glass replacement. If you own a restaurant you may consider a specific property insurance to cover your equipment such as your kitchen appliances, cash registers, booths, and bar area in case of a fire or other covered loss.
Liability insurance: Despite the fact you are the model business owner you always face the possibility of a law suit. Liability insurance comes in many shapes and sizes. “Any type of insurance policy that protects an individual or business from the risk that they may be sued and held legally liable for something such as malpractice, injury or negligence. Liability insurance policies cover both legal costs and any legal payouts for which the insured would be responsible if found legally liable. Intentional damage and contractual liabilities are typically not covered in these types of policies.” In this litigious day and age liability insurance is a very wise investment. The cost of coverage can vary and depend on what industry you are working in and the size of the business you own. For instance, a large construction company may find liability insurance much more expensive than a small marketing company.
Workers Compensation: If you have employee’s you will more than likely need workers compensation insurance. As of 2010 workers compensation was required by 49 of the 50 states, with Texas being the only exception. Workers compensation regulations vary by state. Some states require workers compensation for companies with only one employee while others require it for companies with at least three employees. Workers compensation provides coverage for employees that are injured on the job. It can cover the injured employee’s medical expenses and partial disability payments while the employee is unable to work. For a comprehensive list by state of the workers compensation regulations visit the National Federation of Independent Business’s website: http://www.nfib.com/content/legal-compliance/legal/workers-compensation-laws-state-by-state-comparison-57181/. Because workers compensation is generally mandatory by law you should consult a state specific insurance expert to help guide you in your obligations and make sure you are compliant.
Life Insurance: Could your business continue if something unexpected were to happen to you? If you are a key employee, partner or owner and you were to die suddenly could the business go on without you? If the answer to either of these questions is no, life insurance for your business may be a consideration. A good example of this would be a husband and wife that have a family and own a small business together. If either spouse were to die unexpectedly not only would the family need funds to supplement the loss of income, so would the business. Life insurance designated for the business allows an influx of income if needed due to the loss of a key partner.
Data Breach Insurance: This insurance is an additional policy intended to cover the cost of a data breach. In this day and age of technology and hackers this policy may be well suited to your company, depending on what you do and if you handle sensitive data. An IT company or a doctor’s medical practice might be good candidates for this insurance. According to USAToday, 43% of companies experienced a data breach in 2013. In 2014 Target, Neiman Marcus, Michaels, UPS, Dairy Queen, and Home Depot were just some of the bigger named companies that experienced data breaches. Your general liability insurance may address a data breach to a limited extent. Consult with an experienced agent to make sure you have coverage appropriate for your industry and potential risk.
Commercial auto insurance: If your car is used for business purposes or is owned by your company you may need commercial auto insurance. If you use your vehicle for personal and business purposes you still may want to consider commercial auto insurance. Without it, if you are involved in an accident the insurance company may deny your claim under your personal car insurance because the commercial use of the vehicle may violate the terms of your insurance policy. The use of your vehicle and type of business will help determine your need for commercial auto insurance.
Directors and Officers Insurance: This is commonly known as D&O insurance. This business insurance is designed to protect you from personal losses if you are sued as a result of serving as a director or an officer. It may also cover legal fees for the organization should a lawsuit occur. D&O insurance can take different forms based on the industry and potential liability. Typically, D&O insurance does not cover fraud or dishonest acts.
As you can see you have many different options when it comes to insuring your business. Don’t let an unfortunate accident or lawsuit damage the business you have worked so hard to build. Your business needs insurance. Some policies will be required by law while others are optional and case specific. Consult an experienced insurance agent to figure out which insurance options are appropriate for you.