When most small business owners talk about business insurance, they are referring to basic general liability insurance. That is not a knock on the insurance acumen of small business owners in any way, but rather an acknowledgement that the most widely recognized business insurance coverage is general liability (i.e., coverage for slip-and-fall accidents). And to be fair, general liability is an extremely important piece of a small business’s insurance program, if not the most important piece.
However, general liability is not the only coverage crucial to the success of a small business. There are other, relatively well-known coverages like property and loss of income that many small business owners are quite aware of. But there are many more beyond general liability, property and loss of income that, if left out of a small business insurance program, can have a nasty effect on a business should a loss occur.
Below is a list of important “additional” coverages every small business should consider:
- Professional Liability
- If your product or service includes expert advice, you have a professional liability exposure that is not covered under general liability.
- Workers Compensation
- Workers compensation should not be considered an obligation that must be purchased when you hire employees but rather a protection for your business against frivolous lawsuits brought on by desperate employees.
- Hired and Non-Owned Auto Liability
- If your employees run business errands throughout the day with their personal autos, your business is exposed in the event that the employee gets into an accident.
- Employee Dishonesty
- I’d like to believe that everyone is honest, but…
- Electronic Data Processing Equipment
- Computers and electrical devices often have their own (low) property sub-limit. Add this coverage to ensure your electronic equipment is adequately insured.
- Property In-Transit
- For those of you who travel, your business property may not be covered while it’s moving.
- Employment Practices Liability
- Your employees are not your friends and even if they are, they still might sue you.
- Cyber Liability
- If you have confidential or personal information on a business computer, there is a hacker trying to get at it right now.
These are just a few of the types of coverage you should consider in addition to your general liability coverage. I work for and with small business owners every single day. I know the constant cost/benefit analysis associated with every decision.
Business insurance is not “one size fits all.” Find your greatest needs and address those first. Then work your way into the additional types of coverage necessary for future growth.
Good luck!
This is a great post! Thanks for the succinct listing of so many types of insurance. I know it will help clear up the mystery for a lot of people. For those who manufacture products, I’d add Products Liability Insurance to your list. This is often required in order to secure a booth at a retail trade show or to sell your products on the shelves of most retailers in the country. Thanks again for a great post!
I’d suggest adding environmental insurance to the list for any business that (a) manufactures products, (b) owns or operates property with a history of commercial or industrial operations, (c) needs environmental permits for its materials or emissions, (d) is a contractor or transporter, or (e) sells products with potential to cause contamination. Environmental claims tend to be infrequent but substantial when they do occur, and affect businesses of all sizes. Coverage options have expanded in recent years and minimum premiums typically start at $2500.
Donna, great point on the products liability. If you have a Business Owners Policy then products liability will be included in most cases. But for specialty risks like manufacturing products liability is a Must add!
Thank you!
Ryan H.
James
Thanks for the helpful post. A few other commercial policies small businesses may want to consider include product liability insurance, errors and omissions (E&O) and even surety bonds depending on the particular services they offer.
Brian,
Environmental coverages are becoming very important and you are right on the money when you say they are infrequent but often very large. Thanks!
James,
Surety Bonds usually work on a job by job basis are crucial for many contracting industries… Thank you!!!
Jason
Good write up, I live in spokane. Commercial insurance is a must have but everyone is so competitive it’s hard to choose.