Small businesses make up a large portion of the United States economy and are the major employers of workers in the country. Because of the influence in their local communities, small businesses also need insurance to keep their companies protected from potential risks that could prove financially damaging. Small business owners run busy schedules so they need to quickly understand their business insurance options in order to make the right choices for their unique needs.
Business Owner Policy (BOP)
The majority of small businesses do not have high risk of catastrophic claims or lawsuits so their needs can be met with a business owner's policy or BOP. This coverage features two of the most important policies – commercial general liability and property insurance. General liability protects companies from property damage and bodily injury claims while the property insurance protects assets such as buildings, furniture, equipment and inventory. Many insurance companies also add in business income insurance, which covers loss of income and business expenses when a company must temporarily close for repairs because of covered property damage like a flood.
Professional Liability Insurance
Some small business owners need professional liability insurance also known as errors & omissions insurance (E&O). Depending on the profession, coverage is available in $1 million increments to provide protection from mistakes or faulty service. In the medical field, professional liability is known as medical malpractice. Professionals such as accountants, insurance agents, real estate brokers and financial service representative use E&O insurance for protection against bad advice, mistakes and errors that could harm client financially.
Excess Liability Insurance
Excess liability or umbrella policies provide additional insurance protection over and above the policy limits of a business owner policy. This extra safety net of coverage is available in $1 million to $5 million limits and is most likely needed by companies in high risk industries or with significant assets to protect.
Workers Compensation Insurance
Most states require that companies with employees carry workers compensation insurance. This coverage will pay for medical treatment and lost wages of employees with work related injuries or illnesses.
Employment Practices Liability
While workers compensation helps employees with on the job injuries, employment practices liability is actually a coverage that protects the employer. When an employee alleges wrongful termination, discrimination, harassment or even breach of contract, employment practices coverage will pay the legal defense fees for business owners, officers, managers and employees.
Small business insurance doesn't have to be complicated. Consult our licensed insurance agents in your state to learn more about the specific coverage necessary to provide full insurance protection for your small business.