13 Types of Insurance a Small-Business Owner Should Have

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13 Types of Insurance

1. General Liability Insurance: Every business, even if home-based, needs to have liability insurance. The policy provides both defense and damages if you, your employees, or your products or services cause or are alleged to have caused bodily injury or property damage to a third party.

2. Property Insurance: If you own your building or have business property, such as office equipment, computers, inventory, or tools, you should consider purchasing a policy that would protect you if you had a fire, vandalism, theft, smoke damage, etc. You may also want to consider business interruption/loss of earning insurance as part of the policy to protect your earnings if the business is unable to operate.

3. Business Owner’s Policy (BOP): A business owner’s policy package contains all required coverage a business owner would need. Often, a BOP includes business interruption insurance, property insurance, vehicle coverage, liability insurance, and crime insurance. Based on your company’s specific needs, you can alter what is included in a BOP. Typically, a business owner will save money by choosing a BOP because the bundle of services often costs less than the total cost of all the individual coverages.

4. Commercial Auto Insurance: Commercial auto insurance protects a company’s vehicles. You can protect vehicles that transport employees, products, or equipment. With commercial auto insurance, you can insure your work cars, SUVs, vans, and trucks from damage and collisions. If you do not have company vehicles but your employees drive their own cars on company business, you should have non-owned auto liability to protect the company in case the employees don’t have insurance or have inadequate coverage. Many times, the non-owned vehicles can be added to the BOP policy.

5. Workers’ Compensation: Workers’ compensation provides wage replacement and medical benefits to those who are injured while working. In exchange for these benefits, an employee gives up the right to sue his employer for the incident. As a business owner, it is very important to have workers’ compensation insurance, because it protects you and your company from legal complications. State laws will vary, but all require you to have workers’ compensation if you have W-2 employees. Penalties for noncompliance can be very stiff.

6. Professional Liability Insurance: This type is also known as Errors and Omissions Insurance. The policy provides defense and damages for failure to render, or improperly rendering, professional services. Your general liability policy does not provide this protection, so it is important to understand the difference. Professional liability insurance is applicable for lawyers, accountants, consultants, notaries, real estate agents, insurance agents, hair-salon operators, and technology providers to name a few.

7. Directors and Officers Insurance: This type of insurance protects the directors and officers of a company against their actions that affect the profitability or operations of the company. If a director or officer of your company, as a direct result of her actions on the job, finds herself in a legal situation, this type of insurance can cover costs or damages lost as a result of a lawsuit.

8. Data Breach: If a business owner stores sensitive or nonpublic information about employees or clients on his business computers, servers, or in paper files, he is responsible for protecting that information. If a breach occurs either electronically or from a paper file, a Data Breach policy will provide protection against the loss.

9. Homeowner’s Insurance: Homeowner’s insurance is one of the most important kinds of insurance you need. This type of insurance can protect against damage to the home and against damage to items inside the home. Additionally, this type of insurance may protect you from accidents that happen at home or may have occurred due to actions of your own.

10. Renter’s Insurance: Renter’s insurance is a subset of homeowner’s insurance that applies only to those whose who rent their homes. The coverage protects against damage to the physical property, contents of the property, and personal injury within the home.

11. Life Insurance: Life insurance provides for an individual’s loved ones in the event of the individual’s death. If you have life insurance, the insurer pays a certain amount of money to a beneficiary upon your death. You pay a premium in exchange for the payment of benefits to the beneficiary. This type of insurance is very important, because it allows for peace of mind. Having life insurance allows you to know that your loved ones will not be burdened financially upon your death.

12. Personal Automobile Insurance: Another very important type of insurance is auto insurance. Auto insurance covers all road vehicles (trucks, cars, motorcycles, etc.). Auto insurance has a dual function, protecting against both physical damage and bodily injury resulting from a crash, and also any liability that might arise from the collision.

13. Personal Umbrella Insurance: You may want some additional coverage, on top of insurance policies you already have. This is where personal umbrella insurance comes into play. This type of insurance is an extension to an already existing insurance policy and covers beyond the regular policy. This insurance can cover different kinds of claims, including homeowner’s or auto insurance. Generally, it is sold in increments of $1 million and is used only when liability on other policies has been exhausted.

This article originally appeared on Forbes.com.

Tags: Insurance, Minimize Risk

This entry was posted on Friday, January 27th, 2012 at 4:15 am and is filed under Blog, Business Tips, Insurance, Minimizing Your Business Risk, Reducing Your Costs. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.