Types of Insurance Every Small Business Needs

Running a business comes with a certain level of risk, which is why it’s so important to have the right insurance coverage for your company. Otherwise, an unforeseen accident or lawsuit can easily wipe out your business and leave you with financial devastation.   

While certain industries may require specialized types of coverage, every small business needs these basic policies to protect their people, property, and revenue.  

General Liability and Professional Liability 

There are two types of liability coverage every small business needs--General Liability Insurance and Professional Liability Insurance.  

General liability insurance (also known as “GL policies”) help protect businesses from claims that occur as a result of normal business operations. These policies cover personal injuries or property damage connected to your business, including the infamous “slip-and-fall.” 

They also can help pay for legal fees and medical bills related to injuries and offer coverage for any accidental damage you may inflict on a rental property.   

Professional liability insurance (also referred to as “PLI”) is a more specialized type of insurance that specifically includes coverage for negligence, copyright infringement, legal fees, personal injury, and more. While you may think this is something only doctors or lawyers need to worry about, anyone from a photographer to an IT company can easily find themselves on the wrong side of a lawsuit.  

Professional liability can provide coverage for damages caused by something your company did or things that should have been done.  

PLI is ideal for companies that offer a professional service, contract a service to their clients, or offer professional advisory.   

Most businesses opt to have both types of liability coverage, which is a smart move. Lawsuits can be outrageously expensive and a $500 or even $1,000 deductible is much more reasonable than legal fees ranging from five to six figures or more. 

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Business Auto Policy 

If you use vehicles for your business, you’ll want to be sure you have a business auto policy (also referred to as “BAP”).  

Commercial auto policies provide coverage for a company's use of cars, vans, trucks, and other vehicles needed to conduct its operations. Your policy can include coverage for vehicles that are leased or owned by the business, hired by your business, or personal or employee-owned vehicles used for business purposes.  

This type of policy includes coverage for liability and damage. 

Unfortunately, most business auto policies do not automatically cover extra equipment or accessories your vehicle(s) may have. This includes items like ladders, custom modifications, vehicle wraps, and more.  

Unless you specifically list these items on your policy, if you or your employee got into an accident, your payout would only amount to the cost of the vehicle itself. Which means the $4,000 wrap you just had installed would NOT be covered (unless you specifically named it on your policy).  

When it comes to insurance, it *literally* pays to be detailed.   

Workers’ Compensation 

If you have employees on payroll, you need worker’s compensation coverage. This type of insurance protects employees under state laws and provides death, disability, medical care, and rehabilitation benefits for workers who are injured or killed while on the job. 

Your premiums for this type of coverage are determined by your payroll and the level of risk associated with your employee’s job responsibilities.  

Workers’ comp coverage can vary greatly depending on your industry, state laws, and specific line of work. This is where we cannot stress the value of sitting down with an agent to review your needs enough.  

Coverage selection for workers comp should be meticulous (after all, the risk of not having the right type of coverage can cost you...BIG TIME) and you want an agent who is well versed in your industry, points you in the right direction, and can ensure you are not unknowingly vulnerable.  

Trust us, the time to wish you hadn’t shopped for workers’ comp without the help of an expert is NOT when your insurance provider rejects your claim.  

Inland Marine Policy 

An inland marine policy provides coverage for your equipment and other assets when it leaves your physical office location.  

This can include things like: 

• Photography or video equipment 

• Tools 

• Tradeshow exhibit materials 

• Laptops, tablets, and other electronic devices 

• Scientific or medical equipment 

And more! 

In a nutshell, if it leaves your office location and gets transported to another site to perform your work, you need an inland marine policy to cover it should these items become lost, stollen, or damaged. 

Key Man Life Insurance  

Replacing a valuable employee requires a lot of time and money, and you may even lose business during the transition. Key man life insurance policies offer a death benefit in the event one of your vital employees unexpectedly passes away.  

In this case, the death benefit would offer you the time and capital to keep your business afloat as you make arrangements following the loss of a key team member.  

If you have an employee that plays an integral role in your company (meaning their skillset or expertise cannot be easily replaced by someone else) a key person insurance policy is a smart way to preserve their value.  

While some may see this as morbid, it’s truly a smart way to protect your business. These policies affirm how important this individual’s work is inside your company and demonstrates your commitment to your other staff and customers to keep the business running, even if the unthinkable happens to one of your star team members.  

These types of policies are especially recommended if you have a business partnership.  

Commercial insurance is complex, especially when you have to fish your way through industry jargon and numericals you don’t understand. We hope this article offered some much-needed clarity and gave you some great tips to keep in mind when shopping for coverage.  

If you have questions or would like a second pair of eyes to look at your current policy, we’d love to help! 

The way we see it: you should focus on what you do best—building your dream, and we’ll focus on what we do best—protecting it.