As the owner of a small business, you probably have many questions about insurance. This isn’t surprising considering all the implications that come along with insurance. For instance, if you were to form a limited liability corporation online in California, Hawaii, or Rhode Island, you could deduct the premium you pay for health and disability insurance on your taxes. Since it’s such an important yet potentially confusing subject, I’ve asked Erica Bell of Business.com to explain the different types of business insurance available, to help you determine what you need for your organizing business.
Businesses that are just starting up or are looking to expand need to consider business insurance. Business insurance can protect your company’s assets in the event something unfortunate occurs. While some states mandate the purchase of various insurance policies, some states don’t. Make sure you do your research and buy an appropriate plan before any potential risks occur to ensure you’re covered. Here’s a rundown of 5 of the most common types of business insurance, what they protect, and who needs to invest.
Property and Casualty Insurance
Property insurance protects a person or business with an interest in physical property against its loss or the loss of its income-producing abilities. Casualty insurance protects a person or business against legal liability for losses caused by injury to other people or damage to the property of others. These two types of insurance are usually grouped together in a single policy.
- You should invest in this type of insurance if your business has a physical location. Consultants may not need it. Talk to a consultant to make sure you understand your needs and find the appropriate policy.
Commercial Vehicle Insurance
Commercial vehicles are not covered under personal auto insurance. Commercial auto insurance covers your business for loss or damage to vehicles used by your business and for damage to others caused by your business vehicles.
- If you have a business truck, van, or other auto, make sure to invest in commercial auto insurance before driving anywhere. Accidents can happen at any time and you don’t want to be without insurance in the event one takes place.
There are few different types of liability insurance and the two most common are professional and product. Product liability insurance protects against financial loss as a result of a product defect that can cause injury. Professional liability insurance protects you from lawsuits that are results of malpractice, negligence and errors.
- Nearly every business needs some type of liability insurance. Whether it is a general liability plan in case someone was to fall on site or a product liability policy in case a defect occurs, you need to be covered. An errors and omissions liability plan is great for consultants.
This type of insurance is mandated by law and covers employees if they are injured on the job, in exchange for the employee’s right to sue. It provides wage replacements and medical benefits to injured employees. Your business can choose a commercial insurance carrier or go through a state program.
- Every business needs to invest. If you have employees, by law you must participate in a workers’ compensation program. There isn’t a debate about what kind of business needs this insurance, because every business does.
Life and Disability Insurance
Disability insurance is mandatory in five U.S. states: California, Hawaii, New Jersey, New York and Rhode Island. Life and disability insurance covers your business in the event of the death or disability of key owners, partners, or employees. There are variations of each so make sure you’re getting the right coverage.
- Especially if you run a small business, this is a type of insurance you’ll want to consider. If a disability of the owner occurs, various policies can assist them and/or their business with costs such as business overhead and benefits.
Your business is valuable; not only to you, but your employees and consumers as well. Making sure you’re covered and they’re covered is essential. Protect your business and cover your bases. Talk to a business consultant, compare insurance providers, and conduct online research to determine where your business may be at risk and find a policy that covers it.
Erica Bell is a small business writer who focuses on topics such as small business insurance and liability insurance. She is a web content writer for Business.com.