“Hope for the best but prepare for the worst” is a mantra that all business owners should follow. Let’s hope nothing happens to your business, but if it does, you need the right insurance policy for protection.
The most common type of insurance for small businesses is general liability insurance, and for good reason: this catch-all insurance typically covers the legal fees and other costs — but not punitive damages — associated with lawsuits stemming from accidents or negligence.
If you operate a restaurant, for instance, and a customer falls and injures him or herself, that customer may sue you for medical expenses. General liability insurance offers protection from lawsuits such as this, giving business owners such as yourself peace of mind knowing that you’ll stay financially afloat in the wake of a lawsuit.
Product Liability Insurance
If your business manufactures, produces, distributes and/or sells a product, you’ll want to buy product liability insurance. This insurance covers a business against financial losses from a defective product that causes injury to the user.
Coverage amounts for product liability insurance vary, which is why it’s important to choose the right plan for your business. A business that manufactures skill saws or other power tools should buy product liability insurance with a high coverage amount, simply because there’s a greater risk of injury to the user. But a wedding dress boutique needs minimal product liability coverage, as few people (if any) will injure themselves while wearing a wedding dress.
Commercial Property Insurance
A third type of insurance for small businesses is commercial property insurance. As the name suggests, it provides coverage for damage to a business’s commercial property, including damage caused by fire, flood, wind, hail, smoke, theft and vandalism.
Commercial property insurance defines “property” as more than just a business’s physical building; it also encompasses lost income, equipment, cash and documents. If a fire destroyed your retail store, for instance, commercial property insurance will typically cover all of your inventory, cash registers, cash and property. Furthermore, this insurance covers the amount of profits you would have earned while your store is out of commission for repairs (lost business).
There are two subtypes of commercial property insurance: all-risk and peril-specific policies. All-risk policies cover a broad range of property-damaging incidents, while their peril-specific counterpart only covers specific property-damaging incidents as described in the policy. A peril-specific policy, for instance, may only cover fire or flood damage. If your business operates in an area that’s prone to flooding, opting for a peril-specific flood policy is recommended.
Like product liability insurance, professional liability covers a business against lawsuits stemming from the services it provides. Common types of professional liability insurance provide coverage for malpractice, negligence and errors that cause bodily harm or property damage. Some statues even require certain businesses to have professional liability insurance, so don’t assume that it’s optional.
Home-Based Business Insurance
Your homeowners’ insurance policy typically will NOT cover losses of a home-based business. Even if it does, the coverage amount is minimal at best. So if you operate a business out of your home, you’ll need to buy a home-based business insurance policy. This insurance policy provides coverage for business equipment, computers, inventory, supplies, lost income and more.
These are just a few of the most common insurance types for small businesses.
Don’t let your business succumb to disaster. Contact us today to learn more about our small business insurance plans. Oyer, Macoviak and Associates is a family-owned and operated insurance provider that has been serving Florida business owners and residents for more than half a century.