In simple words, small business insurance is what keeps your company protected against various threats that are sometimes constant in a field, while at other times, sudden, unannounced, and catastrophic, such as storms, fires, floods, earthquakes, lightning strikes, and pandemics. Especially in light of the present situation that has crippled the entire global economy, it has now become more evident than ever before that every SME needs small business insurance. However, there is confusion regarding the exact kind of policies each business needs to cover them.
Depending on which field of the industry you are trading in, the exact details will vary for apparent reasons, but here’s a general summary of which small business insurance policies should be prioritized by both entrepreneurs and executive leaders.
Business liability insurance or professional liability insurance is a must-have for SMEs. A good policy should protect the company against various kinds of negligence-related claims, such as injury on the property or damage of the customer’s property, that was the company’s fault. However, the scope of professional and business liability insurance coverage can be vast.
For example, professional liability insurance for a surgeon will protect him/her against medical negligence claims by paying for settlement if the claimant wins or the professional wants to avoid disrepute by settling. Similarly, the average business liability insurance will cover settlements or legal fees associated with fighting against a claimant who got injured on the business’s property. The idea is to find a small business insurance policy for liability that suits your particular business and its possible needs.
Product Liability Insurance
This is the small business insurance policy exclusively applicable to those that have a manufacturing business. It protects the company against any litigations brought against the company for manufacturing a product that caused harm to someone in a way that it shouldn’t have.
Quality checks are so necessary these days, and you really should invest heavily in making sure your products are safe before beginning mass production. On the other hand, if the whole Galaxy Note 7 disaster has taught us anything, it is that we can never be careful enough. If Samsung can make such a blunder, anyone can. Every small business that works in manufacturing should ensure they have protection against such unfortunate incidents by taking out product liability insurance.
As long as your company has even a single vehicle operating under its name, it needs to have the appropriate commercial vehicle insurance. Coverage will be provided against damage and injuries caused by the company vehicles, in the case of an accident.
Third-party insurance will cover the expense of compensating the other party only. At the same time, a comprehensive small business insurance policy for commercial vehicles will compensate both the claimant and the company if the latter has also sustained property damage on account of the accident. This will come with several clauses, of course, so do check the fine print to see if the insurer has cleverly devised a way to skip paying under most circumstances.
Business Property Insurance
As explained by The Hartford, a proper small business insurance policy, such as property protection, can provide insurance protection for your business. It can help protect against loss of business assets such as computers, machinery, equipment, inventory, power or mechanical tools, accounts receivables, and loss of income caused by crippling of a certain property that’s covered and necessary to generate revenue.
Once again, the parameters will shift slightly depending on the industry you are in, but this is mostly what small business insurance against property damage is all about. Your small business insurance provider should give you options to add different coverages, but that could also raise your premiums.
Business Income Insurance
The main difference between business income insurance and business property insurance is that the former is activated when the SME loses income on account of an unforeseen but possible incident such as fires, earthquakes, storms, robbery, or theft. In other words, small business insurance policies containing the clause of business income protection work to keep businesses from suffering a huge loss or even from going bankrupt on account of income loss.
At times, some business income insurance may also be called business interruption insurance, although they are basically the same type of coverage. Any interruption caused by a natural disaster could be covered under a policy that mentions business interruption insurance coverage. However, given that it’s mostly a loss of income that the policy is covering, it is more or less the same kind of coverage. Still, there may or may not be slight differences between the two, depending on the insurance provider. Clarify the same with your agent before confirming anything.
As we were discussing in the beginning, the exact parameters can and possibly will differ with the concerned field. But these are more or less the pillars on which any small business insurance policy worth taking should be designed to insure your business.