What Is the Best Liability Insurance for My Small Business?
Determining the right liability insurance for your business is a critical part of any business plan. It will ensure you and your business are protected from claims that could arise from normal day-to-day operations.
Take time to review your needs when determining what business insurance is best for you. For instance, do you own or rent the facility where your operations are based? You will want property and general liability insurance for the former and just liability insurance for the latter.
If you have employees, you will most likely need to provide workers' compensation coverage. If you own or lease vehicles to transport your goods, you should have commercial auto insurance.
Your costs will vary by the size and type of your business. Every industry carries its own set of risks. For example, a construction firm will have different risks than a restaurant.
Evaluating the risks particular to your industry will help determine the types of insurance coverage you will need.
Here is a list of some common insurance policies business owners choose to protect their businesses.
Provides protection for lost net income; mortgage, rent, and lease payments; loan payments; taxes; and employee payroll. Generally requires the losses to be caused by a covered peril resulting in physical damage to the property.
Businessowners policy (BOP):
A policy that combines property, liability, and business interruption coverages for small- to medium-sized businesses. Requires that the damages be caused by a covered loss resulting in physical damage to the property. A BOP may also provide coverage for your tools and small equipment.
Covers the cost to repair or replace vehicles (less depreciation) in the event of a covered accident, as well as the cost to rent a replacement auto so that your business can continue operating.
Commercial general liability (CGL):
Insures against the liability exposures of a company that are not explicitly excluded. Coverage includes product liability, completed operations, premises and operations, and independent contractors.
Protects your business's physical assets from perils such as fire, explosions, burst pipes, storms, theft, and vandalism.
Can provide liability protection for a data breach involving sensitive customer information, such as social security numbers, credit card numbers, account numbers, driver's license information, and health records.
Employment practices liability:
Liability coverage for wrongful termination, discrimination, and other violations of employees' legal rights.
Errors and omissions:
A professional liability policy protecting the policyholder against negligent acts and omissions that harm their clients.
Pays for medical care and physical rehabilitation of injured workers and helps to replace lost wages while they are unable to work.
Before deciding which policies are best for your business, be sure to contact a licensed business insurance broker or agent who can provide more detailed information, solicit quotes from insurers, and answer any questions you have.
An independent agent can help business owners understand which products can best meet their needs.