Do You Need Insurance for Your Small Business?



Insurance 101 when it comes to small businesses.

You wouldn’t drive your car without auto insurance, and you shouldn’t run your small business without insurance either. Without business insurance, you leave yourself susceptible to financial disaster in the event your business is involved in a lawsuit or causes damage to an individual or entity. You could be left to pay out-of-pocket for expenses and damages, which few, if any small business owners can afford.

Because small businesses come in all shapes and sizes, finding the right insurance plan that fits your needs is so important. So, here is an overview of small business insurance policies and when it’s the right time to purchase them.

The Essentials

If a small business is still in its beginning phases, has little to no employees, and just needs basic insurance coverage, these are the plans owners should start with:

General Liability
General liability insurance safeguards small businesses from any customer injuries or damaged properties caused by the business. General liability policies can help cover customer’s medical bills or pay for legal costs against a business.

Product Liability
If a small business focuses more on selling products rather than services, owners should look to defend against faulty or defective products. Product liability insurance is similar to general liability insurance. Both plans help cover legal or medical costs, but product liability specifically covers costs incurred due to a particular product that a customer purchased from that business. 

Commercial Property 
If a small business has a brick and mortar location, then commercial property insurance is a must. Also known as hazard insurance, this coverage offers small business owners peace of mind by protecting their business location, whether they own the property or rent it. Commercial property insurance not only helps cover property damages, but also covers the devices used to run the business, such as computers, cash registers, and card readers. 

Business Income 
One type of policy which could have helped some small businesses stay afloat during the pandemic was business income insurance. Though it depends on the type of plan and when it was purchased, business income insurance, also known as business interruption insurance, serves primarily as coverage due to damaged property. While commercial property insurance covers the cost to fix things, business income insurance ensures that small businesses continue to earn some revenue while those fixes are being made. 

Advanced Plans

Once a small business grows into a medium-sized business, hiring employees and/or expanding its operating facilities, these plans are the next step in making sure that growing business is safe, sound, and secure from damage and lawsuits.

Professional Liability
Small businesses which provide services should certainly lock down a professional liability insurance plan. If a business, or any associated businesses make an error which negatively affects a client, professional liability coverage handles that. Whether a business is sued due to negligence, malpractice, or any form of mistake, professional liability coverage can help pay the legal costs.

Worker’s Compensation
While many states require this type of coverage, this especially applies to growing businesses with more employees. “Worker’s Comp” insurance takes care of employees in case of an emergency which leaves them unable to work. If an employee becomes injured or suffers a severe illness, worker’s comp can help pay for medical expenses or lost wages.

Data Breach
Also known as cyber security coverage, data breach insurance can help cover the costs of repairing your business after an information leak. Data breaches are a common hazard for businesses large and small, so protecting the digital aspects of a small business can be just as important as insuring the physical.

Commercial Auto
If a small business expands to include company vehicles for deliveries or other services, commercial auto insurance policies are critical. If an employee is injured while driving a company-owned vehicle, if that vehicle becomes damaged, or if the vehicle damages someone else’s property, a commercial auto coverage can contribute to paying for all company vehicle related incidents.

Next Steps

Simply put, you most certainly need insurance for your small business. But you don’t have to go with the first policy you stumble across. Determine which of these policies best fits your business’ needs and look for options to bundle them.

It’s important to continually evaluate what types of insurance coverage your business needs. Many businesses do this re-evaluation annually. For more information regarding small business insurance, or if you need help choosing the best policy for you, contact the PFGI experts as soon as possible at 610-422-3530. We can help you provide protection to your small business.

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