Did you know that 40% of small businesses don't carry any insurance protection at all? Trying to reduce business costs by turning down insurance coverage could cost you; more than a third of small business owners file a commercial insurance claim every year.
According to The Hartford, the average claim for these most-common incidents includes:
- Reputational harm: $50,000
- Vehicle accident: $45,000
- Fire damage: $35,000
- Product liability: $35,000
- Customer injury or property damage: $30,000
Those are just a few of the incidents your business could face as you sell your products and services.
Want to protect your business? Ask your insurance professional about the 8 most commonly used business insurance policies to protect your company -- and your bottom line.
Business Owner's Policy
One of the most popular policies for small businesses, the Business Owner's Policy (BOP), typically wraps up multiple coverages to protect you against general liability, commercial property, and business interruption risks. Ask your insurance agent if you could save money by purchasing a BOP rather than three separate policies.
General Liability Insurance (BOP)
General Liability Insurance protects you from personal injury or property damage claims. It is designed to cover incidents like slips and falls on your property or damage to someone else's body or property. It can be included in an overarching Business Owner's Policy, an extremely popular way of purchasing this coverage.
Commercial Property Insurance (BOP)
Commercial Property Insurance protects your structure and physical property from damage. Whether you rent or own your commercial space, this business insurance policy is designed to kick-in in the event of fires, vandalism, and theft, to name a few. Commercial property insurance is also an element in the classic Business Owner's Policy.
Business Income or Interruption Insurance (BOP)
Business interruption insurance is insurance coverage that replaces income lost in the event business is halted due to direct physical loss or damage, such as a fire or a natural disaster. It's important to note that business interruption coverage does not typically cover income lost as a result of viruses, bacteria, or pandemics.
Professional Liability Insurance/Errors & Omissions
If you provide a service or counsel to clients, you may need professional liability (also known as E&O or errors and omissions) coverage. Professional liability is designed to protect you against client financial losses as a result of:
- Work mistakes and oversights
- Undelivered services
- Missed deadlines
- Claims of negligence
- Breach of contract
Workers' Compensation Insurance
Workers' Comp insurance is generally mandatory for most businesses in most states. Be sure to check the requirements in your state. If your state requires you to carry workers comp (even for a single part-time employee), failing to do so can result in fines and, in some states, jail time.
Data Breach or Cybersecurity Insurance
Not so long ago, nobody had heard of a data breach or cybersecurity insurance. Today, with federal and state laws imposing steps you must take upon any breach, and the possibility of ransomware attacks, cybersecurity is serious business for any organization.
Any kind of data breach or cybersecurity issue can cost hundreds of thousands of dollars or more.Â Generally, in the event of a breach, you must:
- Notify affected clients
- Deal with the public impact on your reputation
- Offer credit monitoring services to affected clients
- Perform any federal or state-required remediation for your business
Cybersecurity insurance helps cover these costs and can cover the costs to defend your business against any suits by impacted clients.
Employment Practices Liability Insurance
Unfortunately, it's not uncommon for employers to be sued by current, former, or even prospective employees. That's right, you could face a lawsuit for not hiring someone if the prospective employee believed they didn't get the job because of discrimination. Lawsuits for wrongful termination are also a risk employers face when firing employees.
Employment practices liability insurance (EPLI) covers businesses against claims by workers that their legal rights as employees of the company have been violated. EPLI provides protection against many kinds of employee lawsuits, including claims of:
- Sexual harassment
- Wrongful termination
- Breach of employment contract
- Negligent evaluation
- Failure to employ or promote
- Wrongful discipline
- Deprivation of career opportunity
- Wrongful infliction of emotional distress
- Mismanagement of employee benefit plans
Protect Your Business with Commercial Insurance
Which of these most common commercial insurance policies is best for your business? Your business needs are unique to your industry, specialty, business size, and even your geographic location. To best determine the needs of your business, contact an insurance professional for an individualized quote and recommendations on the best business policies to protect your company, and your bottom line.