Types of Insurance Small Business Owners Need to Have

Beyond providing coverage like health insurance for themselves and their employees, small business owners should also carry insurance to protect their business. One lawsuit or catastrophic event could be enough to wipe out their business, erase all their hard work, and possibly drain their personal bank accounts.

There are many types of business-specific insurance policies—after all, there are many types of businesses offering myriad services and products! Below is a list of the most common and comprehensive policies to get you started to find which ones are right for your small business.

  1. General Liability Insurance

    Even if you run a home-based business, it’s smart to carry a general liability insurance. A policy provides defense and pays for damages if you, your employees, and your products or services cause, or are alleged to have caused, bodily damage or property damage to a third party—whether that’s a customer or a vendor you work with.
  2. Property Insurance
    If you own the building your business is in or if you lease a space that houses property used for your business (office equipment, furniture, computers, inventory, tools, etc.), this policy pays for damages caused by a fire, vandalism, theft, smoke damage, storm, etc. However, floods and earthquakes are generally not covered. You can also purchase business interruption, or loss of earning, insurance as part of this policy. This would pay out lost revenue and fixed expenses if your business is unable to operate for a period of time.
  3. Business Owner’s Policy (BOP)
    This is sometimes called small business insurance and includes many of the individual policies on our list. Often, BOP will include business interruption insurance, property insurance, vehicle coverage, liability insurance, and crime insurance. You can change what’s included in a BOP policy based on your company’s needs. Bundling services this way can save you some serious cash.
  4. Commercial Auto Insurance
    Commercial auto insurance protects company vehicles that carry employees, products, and equipment and insures against third-party injuries. A lawncare service business would be a good example of a business that would need this type of insurance. Even if employees use their own cars to drive for company business, a business owner should look into non-owned auto liability to protect the company in case an employee lacks or has inadequate coverage. This can usually be added to a BOP.
  5. Worker’s Compensation
    Anyone with W2 employees needs to carry worker’s compensation insurance. It will provide wage replacement, medical benefits and treatment, disability, and death benefits to employees injured on the job. In accepting this insurance coverage, employees give up their right to sue you. Penalties are stiff if you fail to carry this type of insurance.
  6. Professional Liability Insurance
    Also called errors and omissions insurance, this policy projects against failure to or improperly rendering professional services. A general liability policy does not cover these scenarios. Owners with any type of professional firm, including lawyers, accountants, consultants, notaries, real estate agents, insurance agents, hair stylists, technology providers, and others would want to carry a professional liability policy.
  7. Product Liability
    If you manufacture products for sale, this works to protect your business with tailored coverage to a specific type of product you make and sell.
  8. Data Breach
    If your business is responsible for protecting sensitive, non-public client information, this policy is a must-have. It will protect against loss or theft of employees and client information held on computers, servers, or in paper files.
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Notice of Changes in Temporary NCUA Insurance Covereage for Transaction Accounts - All funds in a \"noninterest-bearing transaction account\" are insured in full by the National Credit Union Administration through December 31, 2012. This temporary unlimited coverage is in addition to, and separate from, the coverage of at least $250,000 available to members under the NCUA's general share insurance rules. The term \"noninterest-bearing transaction account\" includes a traditional share draft account (or demand deposit account) on which the insured credit union pays no interest or dividend. It does not include any transaction account that may earn interest or dividends, a negotiable order of withdrawal (\"NOW\") account, money-market deposit account, and Interest on Lawyers Trust Account (\"IOLTA\"), even if share drafts may be drawn on the account. For more information about temporary NCUA insurance coverage of transaction accounts, visit www.ncua.gov. (2) If an insured credit union uses sweep arrangements, modifies the terms of an account, or takes other actions that result in funds no longer being eligible for full coverage under this section, the insured credit union must notify affected members and clearly advise them, in writing, that such actions will affect their share insurance coverage.