Insurance Needs for Small Businesses*
As a new or existing business owner, several large responsibilities are solely on your shoulders. All of the risks for the business fall on the owner, both in terms of legal and financial matters. For this reason, it is imperative that all business owners protect both their businesses and themselves from liability by securing appropriate insurance policies. Here are some of the most common types of insurance policies small business owners may want to consider with their insurance provider.
Liability Insurance – This type of insurance is all encompassing and will cover damages to the business, any employees, inventory or if there is an injury. The exact type of policy needed is based upon the type of business you own and more than one policy may be required. There are various types of liability insurance:
General Liability – Protects your business if a person is injured on your property and typically covers medical bills, damages and attorney fees.
Product Liability – This type of insurance is essential if your business sells physical products. Coverage includes all damage to people or property that have used the products, including medical and legal fees.
Cyber Liability – Protection in the event of a data breach is crucial in today’s world and this policy covers expenses such as alerting clients of a breach, costs associated with the reestablishment your business’ good standing and any damages associated with the breach.
Professional Liability – Protection for damage from the services a business administers. For instance, if your business provides cleaning services and an employee accidentally breaks an item or falls, this policy will cover the cost of the broken item, medical bills and legal defense.
Directors and Officers Liability – This protection is to remove personal liability from the company’s executives. The policy will cover legal costs, damages and protect all personal assets of the directors if a lawsuit is filed against them, or the company files for bankruptcy.
Employee Practices Liability – This coverage protects the business owner in the scenario that an employee sues the owner or the business.
Fiduciary Liability – This policy takes effect if a client or employee loses money or benefits due to an error by the company. This is especially relevant if the business has a fiduciary duty to consumers or their employees such as an insurance agency, wealth management firm, real estate brokerage, or if the company offers an employee benefit plan.
Liquor Liability – This policy obviously applies to businesses that sell or serve liquor. Coverage would apply if the alcohol sold led to damages and would cover legal costs, medical bills for those injured, costs of property damage and any settlements or judgements.
Workers’ Compensation – While many states require this type of insurance for any business with at least one employee, it is very highly recommended even in states that do not. Coverage for medical bills, care and lost income are included if an employee is injured on the job.
Commercial Property Insurance – This policy will cover physical office, storage and warehouse space as well as anything in it including equipment, furniture, electronics, etc., in the event of natural disasters or theft. This is applicable whether the property is rented or owned.
Commercial Auto Insurance – This policy covers all vehicles owned by the business in the event they are involved in an accident as well as anyone injured.
Business Income Insurance – This policy will cover the expenses of having to shut down a business unexpectedly and temporarily due to an unanticipated circumstance such as a natural disaster. Payouts will be based upon previously recorded business income and expenses.
Umbrella Insurance – This type of policy fills in the gaps of any other policy that may be lacking or limited. It is not by any means a necessity but should be a consideration if the type of business is high risk.
*Pan American Bank & Trust does not offer insurance products or services. Consult a licensed insurance professional for information on insurance coverage for your business. Insurance products are not insured by the FDIC.