Running your own small business can be an exciting but daunting adventure, no matter what kind of business you have. With so much on the go, you’ll be exposed to various risks that could have a huge impact on your day-to-day operations, not to mention your bottom line. With all of the time, money and effort you’ve invested in starting and building your small business, it’s important to have a plan in place to protect it. This is why identifying the correct small business insurance policy you need is so important.
Types of Small Business Insurance
The right insurance for your business can help protect you from expensive losses. But with so many options available, you may not be sure which coverage is right for your particular business. So here’s a quick, easy-to-understand breakdown of some of the most common insurance coverage you might need for your business.
What Should You Insure
To determine your business insurance needs, you should evaluate three key areas of your small business: your property, operations, and bottom line. Just remember that certain areas may need more protection than others, depending on your business.
Do you have a storefront or workshop? Do you drive a vehicle for your small business? Do you run your small business from home? Here are the main types of insurance coverage you should consider for protecting your property:
- Commercial Property Insurance: This coverage can help protect your small business property, such as a storefront or a workshop. It includes protection for your building – if you own it – and its contents, including equipment, electronics, furnishings, and inventory or supplies. IE: If you own a retail bakery and your stock and equipment are destroyed by a fire, this coverage can help keep the replacement costs low. It may also cover items outside of your building, including signage, fencing and landscaping.
- Commercial Auto Insurance: If you or your staff drive vehicles as part of your day-to-day operations, you’ll want to have commercial auto insurance. Whether you’re an electrician driving from site to site or a florist delivering bouquets, this coverage can help cover damages to your vehicles and accident benefits should you or your staff be injured in an auto accident involving one of your commercial vehicles. And remember, your personal auto insurance policy may not fully protect your vehicle when it’s being used for commercial purposes.
- Home-Based Business Insurance: Do you run your small business from home? Your home insurance policy may not be enough to protect your business operations or business assets. For instance, it won’t cover any business-related equipment, so you’ll still need additional contents coverage to ensure those items are protected in the event of a loss. Home-based business insurance can help cover many things such as stolen inventory, and customer slip-and-fall accidents at your home.
There are many common scenarios that could result in costly lawsuits – all of which can be covered through different forms of liability insurance. Here’s a breakdown of the main insurance coverage that can help protect your business’ day-to-day operations:
- Commercial General Liability Insurance: Also known as CGL insurance, it’s essential for all types of small businesses. It helps protect your small business if it’s found to be responsible for causing a customer, supplier, or other third party to suffer a bodily injury. IE: If a customer slips and falls walking up the steps to your store, they could file a liability claim against your business for their injuries. Coverage may also protect your small business if you (or your staff) are legally liable for causing damage to a third party’s property.
- Product Liability Insurance: This coverage can help protect your small business if it’s found legally liable for producing or selling a product that causes bodily injury or property damage to a third party. These issues can lead to costly lawsuits for your small business. If your business makes and/or sells a product, you should consider this type of coverage. Product liability is typically included in most CGL policies, but it’s always best to check!
- Professional Liability Insurance: This coverage can help protect your small business if a client files a lawsuit should they suffer a financial loss that resulted from your wrongful act. IE: If you don’t deliver a completed project by an agreed upon date or time, or your client believes the professional services they received failed to meet expectations, and either resulted in your client suffering a financial loss, this coverage can help cover your costs. If you provide any type of professional service for a fee, consider this type of coverage.
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Insuring Your Bottom Line
Unexpected losses can come in many forms. Recently in Hamilton, Ontario, vandals caused an estimated $100,000 worth of damage to the premises of one small business. Scenarios like this may force you to temporarily close up shop. While your net income stream could stop or be greatly reduced while you take care of repairs, your continuing normal operating expenses would start to pile up quickly. There is, however, insurance that helps protect you should you suffer a loss of business income.
- Business interruption insurance: This coverage can help you cover your continuing normal operating expenses, including payroll, and help you stay afloat when your operations are interrupted by an insured peril and as a result, your business is unable to generate income. Let’s say a fire on your property forces you to close your doors until repairs are made or a new location is found. Business interruption insurance can help you continue your business until you’re able to get up and running again.
How to Decide the Right Insurance Coverage
Clients of Small Business BC, even with the outlines above, deciding what coverage your business may need can be overwhelming. TruShield Insurance’s online estimator can help. To determine what type of coverage you may need and how much it may cost, just answer a few online questions about your small business.