Whether you’re starting your own small business from scratch or growing a side hustle into a larger business, it’s essential that you understand your insurance options. On average, less than half of all small businesses (500 employees or fewer) will survive beyond five years. From a customer lawsuit to theft and loss, there are several financial burdens you may encounter - being properly covered can provide peace of mind should the unexpected happen.
New to business insurance options? Here are the essentials you should consider and how they will protect you.
1. Business Owner’s Policy (BOP)
Business owner’s policies (BOP) combine protection from major property and liability risks into one package. BOPs take into consideration a common denominator of risk to which businesses are exposed and package them together.
Typically, BOPs include property insurance, business interruption insurance, liability protection, medical payments, loss of income, data breach, equipment breakdown and employment practices liability.
However, BOPs do not cover professional liability, auto insurance, worker’s compensation, health and disability insurance. BOPs save small business owners time and energy in trying to figure out exactly what coverage to purchase.
2. General Liability
A general liability policy protects you from financial responsibility for property damages or bodily injuries caused by you, your employees or your products and/or services. By law, this is a must-have policy for many states, according to the U.S. Small Business Administration (SBA).
There are three standard types of liability coverage:
- General liability coverage protects you from lawsuits resulting from accidents, injuries or claims of negligence.
- Product liability coverage protects manufacturers and/or vendors of products against product defect claims. It also protects against damage or injury caused by your product.
- Professional liability coverage provides protection from errors or negligence, for example, malpractice insurance for attorneys and physicians.
Learn more about liability insurance and if it’s right for your business on our website.
3. Commercial Auto Insurance
When it comes to running a business, vehicles are crucial for a variety of tasks. Commercial auto insurance isn’t just for large fleets; any car, truck, van or similar vehicle used as part of your operations needs to be covered. It is important to protect your drivers and vehicles through proper insurance coverage. An employee’s personal auto insurance policy will not protect them if they are involved in an accident whether at fault or due to the negligence of another driver. Commercial auto will financially protect your business from personal injury liability and coverage for collisions and uninsured drivers. You can learn more about commercial auto policies on our website here.
4. Property Insurance
Do you have a physical location for your business? Do you keep work-related items and products in your home? Then you’ll want to consider a property insurance policy. This will
protect your business against unexpected incidents that may jeopardize business assets and the physical property itself. Fire, theft, storm damage and floods can happen, and a property insurance policy will cover the cost of the building and any loss of inventory.
If you work out of your home, you should be aware that your homeowners’ policy likely isn’t enough to protect your business assets. It’s important to have a policy that either includes your professional property or a separate policy entirely to make sure your business is protected.
5. Workers' Compensation
Workers' compensation provides coverage for your employees if they get injured on the job. It can also help cover employee medical, rehabilitation costs and lost wages. While it is mandated by law for most states, it also financially protects you and your business. For example, your employees forego their right to sue your business for negligence thereby reducing your exposure to legal complications.
You can learn more about Eastern Insurance’s Workers’ Compensation policies here.
6. Health Insurance
If your business operates with fewer than 50 full-time employees, you are not mandated by law to provide health insurance and will not receive a penalty should you fail to provide long-term health insurance.
However, if you are a business owner that employs less than 50 full-time equivalent employees, there is value in providing health coverage for your employees and you do have several policy options to offer. Some of the benefits to offering health insurance to your employees include:
- Employees who are satisfied with their benefits are more than twice as likely to report being very satisfied with their jobs.
- Employers can deduct 100% of their employees’ health insurance costs as a business expense.
- Businesses with less than 25 employees may receive a tax credit if certain criteria are met.
- Preventative health care can help boost productivity and mental wellness for your employees.
7. Cyber Insurance
With so many employees working remotely today, cyber insurance is more important than ever. According to Gartner, 95% of all cyberattacks are the result of human error. Even if you train your employees properly, there is always a risk of loss. If you keep sensitive customer information on your database, it’s crucial to have a cyber insurance policy to protect you from a lawsuit and to manage the aftermath of the attack.
If you could use assistance understanding your business insurance options, contact a member of the Eastern Insurance commercial lines customer service team by calling 800-333-7234 (Option 2), or sending an email to firstname.lastname@example.org.