The fact you are wondering what kind of insurance you need is always a good sign. Many smaller business owners overlook the importance of insurance and what different coverages are available in the marketplace.
While there are many types of insurance policies and coverages available most, property and liability insurance is often the most popular choice. This type of insurance covers damage to your property and any loss suffered by others due to your negligence.
However, the type of business you own could mean you need more than just property and liability insurance. Here we’ll take a look at the types of commercial insurance available and the coverage right for your needs.
What are the types of business insurance?
The 4 standard commercial insurance policies businesses require are:
1. Liability insurance
Every business needs liability insurance. With this policy, you are covered for damages caused to property of others or bodily injury due to your negligence.
2. Commercial property insurance
Not all businesses require commercial property insurance. However, it is not restricted to an actual building. It also applies to office equipment, computers, inventory, and tools of your trade. With commercial property insurance, you are covered if any of these items are lost due to theft, fire, vandalism, etc.
3. Commercial auto insurance
If you own company vehicles, you need commercial auto insurance. This protects the vehicle, the driver, and with cargo insurance anything transported in the vehicle.
Keep in mind: if you use your vehicle for business purposes, you may not be covered if an accident occurs while you were using it for business. If the vehicle is used for business to earn an income, then it should be rated for business use and appropriate premiums paid to cover the risk of using the vehicle for this purpose. For any goods carried in the vehicle, one needs to cover this properly under a cargo policy. That’s why you should always speak to your insurance broker to find out if additional coverage is required.
4. Professional liability insurance
If you provide a service to your customers, this insurance covers you should you fail to correctly deliver your service. Also known as Errors and Omissions Insurance, it is a must for professionals offering legal, financial, consulting, real estate, technology services. If you can be held professionally accountable for services rendered, you need professional liability insurance.
What are some specialized types of business insurance?
While the standard commercial insurance policies tend to provide the necessary coverage, you should consider these additional insurance types. Some additional commercial insurance coverage to consider include:
1. Business owner’s policy (BOP):
A business owner policy provides all the coverage you could need. This includes:
- Property insurance
- Liability insurance
- Business interruption insurance
Choosing a BOP saves you money as it is usually provided as a package policy including many extra coverages all included in one price.
2. Directors and officers insurance
If your business has directors and officers, this protects against their actions that negatively affect the company, as well as any lawsuits resulting from their actions.
3. Data breach
This is important today due to the threat of cyber-crimes. If you have computers or save information online, this insurance protects you should a breach occur.
What happens without business insurance?
This is an important question. Without business insurance, you are putting yourself at risk of financial disaster. While some businesses — such as contractors — need insurance, you might think you are safe from possible issues. However, you never know when something terrible might happen.
Without insurance, you are at risk of:
- Lawsuits filed against for causing property damage or injury to others.
- Lost income if you are unable to operate due to an insured loss like fire, explosion, theft, etc.
- Loss of business due to damaged or stolen equipment that keeps you from operating
- Complete financial disaster should someone sue you, and you are forced to pay them with your own money
The possible scenarios that could put you in financial hardship or losing your business are endless.
How can I find affordable business insurance?
While it is understandable that you want to find ways to save money as a small business owner, insurance is not the place to cut corners. That said, there are many ways you can save on your premiums, including:
1. Combine insurance policies
Bundling using BOP insurance is a great place to start. However, many insurance companies give you even better pricing if you combine your small business insurance with your personal insurance. Working with one insurance company is the best way to see the most savings.
2. Discuss your insurance needs
Don’t assume you know what coverage is needed or what types of coverage are available. Because no two businesses are exactly alike, your insurance broker is the best person to discuss your needs. We can look at your threats, risks, and business to determine what coverage is recommended.
3. Consider business risks
Considering your business risks and taking a proactive approach to reduce risks can also save you money on your insurance. Even little things like improving security to reduce the risk of theft can work in your favour.
4. Use a broker
Insurance brokers will get multiple quotes on your behalf. This allows you to compare packages and choose the one that suits your needs and budget.
Commercial insurance is the best way to protect your personal finances should anything go wrong with your business. Without commercial insurance, you are personally responsible for covering any damages resulting from alleged negligence on your part or due to your employees.
Not only could you lose your business, but you are also putting your family’s financial welfare at risk. An insurance broker can discuss your needs and recommend the right commercial insurance for your needs.
If you would like more information about the commercial insurance needed for your business, call Bow Valley Insurance at 403-297-9400 or contact us here.
Coverage is subject to policy wording, terms, conditions, and deductibles. Protection is limited to the perils, coverage, exclusions, and limits shown on the policy.