You probably already have a number of insurance policies:
- Business owner’s policy (BOP) to provide protection for your property.
- Liability coverage for third parties
- Workers’ compensation for your employees
- Auto coverage for any business vehicles.
- Health insurance.
But in today’s litigious society, there are other types of insurance you may want to have for optimum protection. Below are 5 additional types of business insurance to consider.
1. Business Interruption Coverage
What happens if your business experiences a catastrophe, such as a tornado or fire?
In order to have the money to pay your ongoing bills (including wages to your staff) until you can resume normal operations, or perhaps, to operate from a temporary location, you probably want to have business interruption coverage.
This coverage only applies in select situations (e.g., when a disaster forces you to shut down) and won’t pay out for an initial period (specified in the policy), but for some businesses it may be the difference between surviving a disaster and going out of business.
The cost of the coverage varies with your type of business. The cost usually is lower for one that operates from an office versus one that operates from a store.
2. Employment Practices Liability Insurance
The biggest source of litigation against a small business today is from its own employees (and job applicants) making claims for discrimination, sexual harassment, wrongful termination, or some other alleged wrong. In order to have the funds to pay any damages resulting from such claims, consider employment practices liability insurance (EPLI).
This coverage may be a stand-alone policy or, in some cases, can be an add-on to your BOP. Having the coverage can provide two significant benefits:
- It can lower your risk of liability because the carrier likely will review your employment practices and make recommendations that can avoid problems.
- The policy provides you with an attorney in case of any action against you. Of course, you’re free to obtain your own, but the carrier obviously wants to defend you to avoid having to pay on a claim.
3. Errors and Omissions Coverage
Doctors, lawyers, and other professionals routinely carry malpractice insurance to protect them from claims by their clients that they performed negligently or failed to do something they should have done. But this type of coverage isn’t limited to professionals.Just about anyone in business can obtain errors and omissions (E&O) coverage.
The amount of coverage you should carry and its cost varies considerably with the type of work you do, your location, and other factors. Talk with a knowledgeable insurance agent for assistance.
4. Personal Umbrella Policy
If you’re a sole proprietor or a general partner, you are well aware that your personal assets are at risk for debts in your business. You probably considered the personal liability risk factor when you selected the form in which to conduct business. But despite your expectations of low risk, you may want extra protection…just in case.
This comes in the form of a personal umbrella policy, which provides added coverage to your existing homeowners and personal auto policies. The cost of an umbrella policy is modest compared to the protection it provides (e.g., $600 per year for $5 million of coverage).
5. Workers’ Compensation for Yourself
Most states do not require coverage for sole proprietors and partners. The treatment of members in limited liability companies (LLCs) varies greatly. However, even if you aren’t required to have this coverage, you may be able to opt in. This gives you an added measure of protection if you’re injured on the job.
Check your state’s rules to determine whether this option is open to you. Find a link to your state’s workers’ compensation division at SAWSA.
Don’t wait until a problem arises and you find yourself without adequate protection. Sit down with someone who can advise you on the types of coverage that you should have.
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