Every small business faces a variety of risks depending on the size of the operation and the industry. Even with the best safety and security measures, accidents can still happen. One way to help minimize these risks is to carry the right insurance.
There are many different types of commercial policies, but even for experienced business owners, the process can be overwhelming. That’s why we’ve broken down four major areas of risk that small businesses face and how you can protect yourself.
Nearly every aspect of life is conducted digitally and for businesses having a strong online presence is crucial. It will help you promote your products or services and enables clients and prospects to easily find you. But, it also leaves businesses vulnerable to cyberattacks.
A single data breach could set your business back thousands of dollars and could irreparably damage your business reputation. If you handle personal information, such as credit card numbers or employee information, Cyber Liability is an essential policy. This policy is the only commercial policy that can cover claims associated with cyberattacks and data breaches.
Another risk that small businesses need to consider is a business interruption which can come in the form of a fire, storm, or other natural disasters.
You can protect your business against lost income due to an unforeseen event by purchasing Business Interruption insurance. It replaces income lost in the event that operations need to be halted due to a physical loss or damage.
In general, it covers net income that would have been incurred during the interruption period, continuing operating expenses, extra expenses during the restoration period, and costs incurred to minimize a loss of income.
Small businesses should have the necessary workplace safety plan in place, but accidents can happen any time and you need to prepare for it. What if employees get sick or injured while working? Employee safety should be a priority so it’s important to carry the right insurance.
This is where Workers Compensation insurance comes in. This policy covers medical, legal, and rehabilitation expenses associated with workplace injuries and illnesses. Keep in mind this policy is often a legal requirement once you have an employee on the payroll.
Errors and negligence
If your business provides professional or consulting services, such as legal or accounting advice, you’re at risk of litigation from dissatisfied clients.
How can you protect your business against claims of negligence or error? Consider buying Professional Liability insurance. It will cover legal defense costs, settlements, and judgments for claims associated with errors or omissions that lead to a financial loss for a client.
Professional Liability is sometimes referred to as Errors and Omissions insurance, or if you run an IT-related business it is often called Tech Error and Omissions.
The key takeaway
Running a business comes with risks, and it’s important to carry adequate insurance to avoid financial losses later on. The key is to identify and understand what these risks are and assess the types of policies that you will need. It’s best to consult a reputable insurance provider who has the expertise and experience in assessing risks and recommending the right types of policies.
ABOUT THE AUTHOR: By Emily Lazration, CoverWallet
Emily is the Content Marketing Specialist at CoverWallet, a tech company that makes it easy for businesses to understand, buy, and manage commercial insurance online. She has written for several outlets including Inc., Ooma, and Fundera covering small business news and advice.