Selecting the Right Insurance for Your Small Business

Selecting the right insurance for your business can be a daunting task. That’s why we’re writing to share some of our experience on the subject. In this article, we’ll break insurance options into 3 groups: 1st – policies that every business should secure; 2nd – policies that certain businesses should consider; and 3rd – policies that business owners should consider if they are looking to limit personal liability if the business is negatively impacted.

First, all business should have Worker’s Compensation, General Liability Insurance, Property Insurance and/or a Business Owner’s Policy.

• Worker’s Compensation Insurance provides protection for employees who are injured on the job by allowing for wage replacement and medical benefits in exchange for their surrendering the right to sue your company for the incident (note that state laws vary by state, but Worker’s Compensation must be provided for all W2 employees).
• General liability insurance provides protection against damages if a business’ owners, employees or products/services cause bodily injury or property damage.
• Property insurance provides protection for buildings and business property such as equipment, computers, tools and/or inventory against theft, fire, vandalism, etc. (businesses may also want to consider adding protection against interruption/stoppage/loss of income).
• Business Owner’s Policy packages provide a bundle of the aforementioned insurances into a single policy that protects the businesses from a variety of income, property, vehicle, criminal and liability insurances.

Second, depending on the assets, arrangement and/or operations of your business, you may also want or need to consider Auto Insurance, Professional Liability Insurance, Data Breach Insurance, and/or Director’s/Officers Insurance.

• If your business involves the use of corporate vehicles (even if the company doesn’t own the vehicles, but employees use their own cars for business purposes), you will need auto insurance (note that sometimes this coverage can be combined in a BOP policy).
• If your business involves the offering of professional services related to accounting, legal, real estate, technology, etc., you may want to consider Professional Liability Insurance (also known as Errors and Omissions Insurance or Malpractice Insurance) for protection against damages for failure to deliver or the improper delivery of your professional services.
• If your business involves the storage of sensitive client or employee information in paper or digital files, you may want to consider a Data Breach Policy that provides protection against losses related to a security breach of that data.
• Finally, if your structure involves the inclusion of directors or corporate officers, you may want to consider Directors/Officers Insurance to personally protect and exempt them against potential legal actions that might result from their involvement in the decision-making, operations or overall profitability of the business.

Third, to limit personal liability, you may want to add Personal Umbrella Insurance, which provides additional protection on top of other insurance policies, extending the overall coverage of the business and further limiting personal liability. Generally sold in $1 million increments, these policies only become active when all other policies have been exhausted.

If you need assistance in determining which and how much insurance you need for your business, call 866-496-2042. We can help you assess the total value of your assets and the appropriate allotment for each individual policy.