Small business owners usually have a limited budget to work with. As such, it is understandable that one would view insurance as somewhat of a luxury. However, it is important to remember that ignoring certain crucial policies will result in more costs that the amount you were trying to save. With this in mind, this article will highlight the types of insurance that small businesses should have.
Importance of Insurance to a Business
- An insurance will protect you from incidences whose resultant costs could diminish your assets or wipe out your business in totality. Picture this scenario: you run a small restaurant that accidentally catches fire and burns to the ground. You probably have a bank loan that you have to continue paying and may not be in a position to raise the money needed to start again. A business insurance will come in handy in such a situation.
- As a business owner, you are not only obliged to protect yourself and your business, but you are also responsible for protecting others. For instance, if a client falls sick after eating food from your restaurant, you will have to pay the damages. Having a liability insurance caters for such incidences without you having to dig deeper into your pocket.
- Some business activities require you to have an insurance. For instance, as a nurse, the relevant association may mandate all its members to have a professional indemnity insurance for nurses.
Types of Insurances That Small Businesses Should Have
Business Owner’s Policy (BOP)
This is one of the popular policies among SMEs. depending on the needs of your business, you can work with your insurer to customize the cover. It usually includes liability insurance, property insurance, crime insurance, vehicle coverage, and a business interruption policy. In most cases, BOP costs lesser than if you decided to take all the integrated covers individually.
Public Liability Insurance
Whether your business is home-based or you have a commercial premise, it is crucial to have a liability policy. This cover will cater for the damages and defense costs in case you, your workers, or the sold products or services cause property damage or bodily harm to a third party. The cover is applicable whether the act is just an allegation or if it actually happened.
Assets such as inventory, office equipment, and the building itself – if you own it – should be protected by purchasing a property insurance. The policy will come in handy in case of unforeseen incidences such as fire, theft, or vandalism. Depending on the selected insurer and premium, you may include earnings protection in case the business is unable to run for certain reasons.
This form of insurance is crucial to any business regardless of its size or sector. In fact, it is required by law at the local and national levels. The policy provides medical benefits and wage replacement to a worker if he or she is injured while at work. With these benefits, the worker gives up his civil right to sue the employer. In addition to it being required by law, the cover protects you and your business from the complicated legal process as well as the resultant costs.
One of the reasons why most people work hard to establish a successful business is to give their dependents and future generations a good life. Depending on the selected premium, purchasing a life insurance means that your beneficiary with receive some cash after your demise. This policy will give you peace of mind knowing that your loved ones will be financially okay even when you are no longer there to take care of them.
Professional Indemnity Insurance
This policy is important for individuals for business proprietors in the service industry. It caters for the damages and defense costs in the event that a client places a claim for an error you made when rendering your services. It is important to note that the details of a professional indemnity insurance are different from those of a general liability insurance. To protect yourself and your business from different potential incidences, it is crucial to purchase both of these vital policies.
Another crucial insurance for small businesses is a car insurance. Depending on your needs, you can choose to purchase a personal or commercial auto insurance. The good thing with this policy is that it covers all cars including trucks and motorcycles. With this policy, you are covered in case of a collision resulting in property damage or bodily harm to yourself or someone else.
How to Find Affordable Insurance
For small businesses, evaluating the affordability of an insurance is subject to two crucial factors. To start with, it is important to take a premium that can be accommodated in your budget. However, cheap is not always apt. it is crucial to purchase a policy that suits all your business needs. With this in mind, compare the small print of the policy offered by various insurers to identify one that is fit for your business.
Insurance policies are meant to protect businesses and individuals from the hefty expenses that may result from various unforeseen events. While small enterprises have a limited budget to work with, there are some covers that are essential. Failure to consider these policies may result in large losses that the business cannot handle.