Small Business Insurance: Managing Risk
A business owner needs to be prepared in the
event of a disaster.
When accidents, injuries, negligence, theft,
or other losses occur in a professional situation,
the business and their owners can often be
held liable for these losses.
What does it mean to be liable?
Liability is a legal responsibility to settle
financial debts or obligations to those affected
by a loss, typically in the form of a lawsuit,
which can total amounts greater than the business
is able to afford.
Business insurance exists to help pay for
Business Insurance doesn’t prevent disasters
from happening: rather, it is a proactive
solution that protects you from liabilities
once a disaster has occurred.
Insurance prevents the cost of business mistakes
from leading to complete financial ruin.
This video will cover the primary types of
business insurance to help you protect your
assets and your business, as well as list
some of the more specialized policies available.
We will also share some agent resources to
help you secure the perfect insurance policy
for your small business.
Protecting Your Company from Liability
The term,“Business insurance”, isn’t
actually a specific type of insurance policy—rather,
it is a term used to describe the types of
insurance coverages designed for business
owners and their companies.
The specific policies and levels of coverage
required will depend on the size and type
of business you operate.
You don’t need to know all the details – a
qualified agent will help determine where
your liabilities lie and recommend appropriate
policies – but every business owner should
have a basic understanding of what coverages
Insurance is a standard cost of doing business,
and is relatively inexpensive compared to
the potential impact of a lawsuit– considering
that the cost of a single claim can decimate
a company, it’s the smart thing to do.
Let’s take a look at three of the most common
forms of small business insurance:
The first is GENERAL LIABILITY INSURANCE.
General liability insurance is the most common
type of business insurance, as it covers the
most basic needs that are shared among all
types of companies.
Things like bodily injury on your business’s
property and physical damage caused by employees
are covered by this policy.
If you aren’t sure which types of insurance
your company needs, you should look here first.
Bear in mind, General Liability does not cover
employee injury- which brings us to the next
common type of business insurance: WORKERS’
Workers’ compensation insurance (workers,
or workmans, comp for short) is meant to protect
the interests of your employees if they are
injured on the job.
It can also protect your business from a lawsuit
if that employee needs additional compensation
for their injuries.
If you have any employees, you’ll likely
need this coverage: almost all states have
laws requiring Workers Compensation Insurance.
Thirdly, there is PROFESSIONAL LIABILITY INSURANCE.
Also known as Errors and Omissions insurance,
Professional Liability Insurance is a policy
that is meant to protect professionals in
Expert advice given to a client by you or
your employees may not always lead to the
If your guidance is deemed inaccurate, negligent,
or fails to deliver agreed-upon results, it
can leave you open to liabilities if the client
is financially damaged and blames your company.
Professional Liability Insurance is essential
protection for providers of professional or
expert advice: Real Estate and Insurance agents,
financial advisors, and other coaches and
consultants can all benefit from this type
Aside from these foundational types of insurance
coverages, there are also more specific policies
They are typically specialized to match the
unique needs of different businesses.
Some of these include:
Commercial auto and property insurance, which
are similar to personal auto and homeowner’s
insurance, but for professional vehicles and
These policies protect owners against damages
arising from car accidents, fire, certain
natural disasters, and so on.
Business Interruption Insurance compensates
your business a percentage of lost revenue
in the case of a catastrophe and business
Product Liability Insurance covers physical
or other harm to a customer that is caused
by a product that you manufacture or sell.
Home-Based Business Insurance covers gaps
in your homeowner’s insurance policy if
you run a business out of your home.
And Data Breach Insurance covers some of the
damages in the event that your customers’
digital data is breached or stolen.
To simplify administration and save money,
you can consolidate your coverages with a
Business Owner’s Policy, also known as a
A Business Owner’s Policy is a group of
insurance policies tailor-made for small businesses.
These packages typically include general liability,
commercial property, and business interruption
insurance and can be customized to your business’s
Your business needs insurance.
This fairly modest investment will protect
both your business and personal assets from
the inevitable liabilities that arise from
mistakes and disasters.
Now that you have seen the basic types of
business insurance policies, you can learn
more about each one in detail at our website.
Check out the links in the description below
for over 300 business ideas with detailed
insurance breakdowns of what policies and
coverage you will need.
We also provide recommended agent links to
speak directly with a specialist to help you
get the best rate on the policies your business
We are dedicated to providing the most useful
information for small business owners, and
would love to see your feedback in the comments
on what other information you need to help
follow your entrepreneurial dreams.
Visit us at HowtostartanLLC.com