Small business insurance is also known as commercial insurance, and it provides cover for the properties and assets of the business, as well as, certain types of losses.
Three basic types of coverage offered by a business owner’s policy (BOP) are general liability coverage, business
property coverage, and business interruption coverage. All these are critical to the protection of a business. Based on their specific business operations and requirements, small business owners may customize their policies by purchasing additional coverage.
A typical small business policy can protect the policy owner’s business from financial loss as well as covered perils such as theft, wind, fire, lightning, and falling objects. The policy buyers must read the policy carefully to find out whether his or her policy covers these specific perils.
Components of Small Business Insurance:
If you are a small business, your business insurance policy must include the following components:
General Liability Coverage: This coverage may help a business owner pay for the medical cost arising from someone suffering an injury on the business property, because of the business owner’s negligence. General liability coverage may also help pay for the legal expenses, if there is any legal action against the owner of the business, as a result of an accident within his or her business premises. Please remember that if the medical expenses for the injured person exceed the coverage limit, the business owners may have to cover the rest by paying out of their own
pocket.
Business Property Coverage: If you own the building from which you operate your business, property insurance protects the building, as well as, its contents from certain covered perils. For example, this coverage may pay for the repairs after a fire in the building. Similarly, property insurance coverage may help you replace stolen business furniture, equipment, etc.
Business Interruption Coverage: Also known as business income coverage, this coverage is useful for the replacement of increased expenditures, as well as, lost income resulting from a covered peril. Let us assume that a certain office becomes uninhabitable because of a fire. In such instances, business interruption coverage helps by paying the rent for a new workspace, while the damaged office gets repaired. The limits of such coverage can be in terms of a certain dollar amount or a time period.
Additional Coverage: Depending on their specific needs, small business owners may include the
following components to their policy:
● Business auto insurance
● Employment practices liability coverage.
● Outdoor property coverage.
● Equipment breakdown coverage.
● Data compromise coverage.
● Professional liability and/or product liability coverage.
Who Needs Small Business Insurance?
Naturally, all small businesses can benefit from a business insurance policy. However, these policies are particularly useful under specific circumstances. Mentioned below are some situations where these policies can be a lifesaver.
● Participating in a tradeshow: Trade show and other networking events provide an excellent opportunity for small businesses to connect with like-minded people in the same industry. However, in order to attend such events, the participants are often required to provide insurance coverage proof.
● First Commercial Lease: As a small business starts to grow, the business may look to lease or rent its first commercial space. In such circumstances, the tenants are generally required to have insurance, including CGL or commercial general liability.
● Customers: Depending on the nature of work performed by the business, a client or customer may request proof of insurance for the business.
● Purchase of Expensive Equipment: Almost all businesses rely on certain types of tools and equipment for improved operational efficiency. However, while purchasing these items, it is extremely important to have insurance for each of them.
● Talent Acquisition: As a business starts expanding, hiring new employees becomes a necessity. With a strong group health insurance plan, businesses can attract top talent and keep the employees motivated.
The Yucatan Times Newsroom
