Small business insurance is a vital way to safeguard yourself and your company. Food trucks, wedding photographers, estheticians, caterers, and more face hazards that can be costly.
Keep reading to discover about business insurance, why you need it, and typical forms.
What is small business insurance?
Small business insurance protects against uncontrollable accidents and hazards. It’s a policy that combines insurance to protect and save your business.
Your business activities and needs will determine the coverage you need.There are five primary considerations that contribute to the requirement of having insurance for any small business.
Also Read: 7 tax strategies for selling a business
Common insurance needs for most small businesses include:
- General liability insurance
- Product liability insurance
- Tools and equipment insurance
- Damage to premises rented
- Workers’ compensation
5 reasons to insure your small business
Not convinced that you need small business insurance? Some of the most salient reasons for its significance to commercial achievement are listed below.
1. Saves you money
A business owner gets insurance to protect themselves. Even though you may pay more for insurance up front, a claim may cost less altogether.
It’s impossible to predict the outcome of an insurance claim. Some claims could be small and cheap, while others could be big and expensive.
In a study done by Insureon, they discovered that 32.5% of small businesses will experience an incident that insurance would cover in a 12-month period. That is almost ⅓ businesses a year.
A client could slip and fall in your office, the oils or lotions you use could lead to an allergic reaction, or your table could break leading to costly claims.
Without insurance, you could be looking at thousands of dollars in defense costs, judgments, and other expenses. With massage therapy insurance, you simply file a claim, and insurance can take care of it for you—saving you money.
No matter what kind of small business you run, insurance can save you money in the case of non-preventable accidents. If your business equipment is stolen or damaged you could be looking at thousands of dollars in repairs or replacement. Together, this cost and the time you can’t work can cost you a lot of money.
Insurance helps minimize these out-of-pocket expenses, allowing you to continue doing what you do best—running your business.
2. Increase your professionalism
Small company insurance boosts your professionalism and credibility, just like a business strategy does.
With insurance, you can handle claims situations better. An insurance company can help you pay a customer or fix faulty equipment. This shows customers and clients you’re serious about your work.
30% (20,000) of FLIP customers said having insurance helps them gain customers. FLIP sends customers a badge they can display on their website to show they’re covered.
Insurance helps you get company capital. The bank may request proof of insurance if you apply for a business loan or line of credit. Documentation aids success.
Also Read: 5 Ways to Improve Business Finance
3. Protects your business
Unfortunately, preventing claims is difficult. Even when careful, accidents happen. Insurance protects your business from accidents.
General liability, professional liability, tools and equipment, and cyber liability insurance give considerable protection. There may be industry-specific property or liability coverage.
Wedding photographers often carry pricey equipment. Camera bodies, lenses, lighting props, and backdrops are included. Camera equipment insurance reimburses the firm for stolen equipment.
Without insurance, the photographer would have to replace stolen equipment and lose pay.
4. Often required by law
Did you know that some jurisdictions mandate that you cover your company with insurance? Proof of insurance coverage may be required when applying for a business loan, signing a lease, or renting a location.
Liquor liability and dram shop regulations are two examples of situations in which a state may mandate business owners to carry insurance. The dram shop legislation in your state mandates that you have liquor liability insurance if you own a bar or restaurant that serves alcoholic beverages.
You may need to include your landlord as an additional insured on your insurance policy if you rent space from them. If your landlord or event coordinator requires you to include them as an additional insured on your insurance policy, they will be protected under the terms of your policy. Landlords typically want to be named as an additional insured on your policy.
5. Offers peace of mind
There are numerous reasons to be concerned about running your business. Financial responsibility should not be one of them.
Running a business has many facets: from payroll to day-to-day operations to interacting with customers, you have a lot on your plate as a small business owner. Small business insurance can give you peace of mind by allowing you to focus less on the consequences of claims and more on the joy your company brings to its customers.
Types of insurance for small business owners
Business insurance can be a confusing subject with confusing terminology. Keep reading for a simplified explanation of what insurance is available for small businesses.
General Liability Insurance
Verify that your firm has insurance to protect it from lawsuits alleging bodily injury or property damage. Claims like these can emerge from normal firm activities. Clients stumbling and hurting themselves on your company’s equipment is a major cause of claims.
Tools and Equipment Insurance
Allows protection of corporate possessions to extend to tools and machinery. For a photography enterprise, this may comprise cameras and related gear. This may include appliances like deep fryers and ovens if you’re a food truck. The thresholds are context-specific and change with the nature of your enterprise.
Product Liability Insurance
Designed for businesses that are in the food industry. This insurance can protect your business from the cost of claims associated with a customer getting sick from the food you served them.
Workers’ Compensation Insurance
Great insurance to include on your small business insurance policy if you have employees. It may even be required by your state.
Commercial Auto Insurance
Add commercial vehicles to your insurance policy. Food trucks and delivery vans qualify.
Liquor Liability Insurance
Essential and required insurance if your business serves or furnishes alcohol. It is even required by state dram shop laws. This insurance can protect you from the expensive cost of claims. These alcohol-related claims can often cost thousands of dollars in out-of-pocket costs if you don’t have insurance.
Damage To Premises Rented Insurance
Can safeguard your company against the expense of claims brought on by damage done to rented property. A photography studio, commercial kitchen, or rented office space all fit into this category.
Cyber Liability Insurance
A fantastic addition to your insurance policy. With cybercrime on the rise, it is important to take the steps to protect your business.