Two in five small businesses don’t have business insurance, according to a survey conducted by FreshBooks. Of those that do, more than half aren’t confident they have sufficient coverage.
If you own a business, it’s essential to your financial health that you have the right type and amount of insurance.
Here are answers to four common business insurance policy questions business owners ask:
1. Do all businesses need business insurance?
Absolutely.
Every business, no matter how large or small, needs an insurance policy. Even if you have a small home-based operation you handle on your own, you’re still exposed to risk. Plus, your homeowners insurance probably won’t cover business-related losses or liabilities.
Depending on how your business is arranged, you may need specific types of insurance to cover your risks. For example, if you have:
- Employees, you’ll need worker’s compensation insurance.
- Vehicles, you’ll need commercial auto insurance.
- An online store, you might need cyber insurance.
Different businesses will be exposed to different risks. Make sure you understand all potential issues that can arise in order for your business to be properly prepared.
2. What can happen if I don’t have insurance?
Many things can go wrong if you don’t have business insurance.
First, there’s the legal aspect: Any business that hires employees is required to get worker’s compensation insurance, and those that use vehicles for business purposes must obtain commercial auto insurance.
Other types of business insurance, like general liability, aren’t typically required by law. However, if something goes wrong, having the right type of insurance can save you a lot of money and headache.
If someone sues your business, insurance will help cover legal fees. If there’s a fire on your property, insurance can help you replace necessary items. If your building is broken into or your goods are stolen, the right insurance policy will help you recover.
3. What types of business insurance policies are there?
For most small businesses, a Business Owners Policy, or a BOP, will be sufficient to cover many of the risks you’re exposed to. These are packaged policies that generally include property insurance, business interruption insurance and liability protection.
Workers comp and commercial auto are typically not included in BOPs. Other types of insurance policies you may need to consider, depending on your organization, include:
- Cyber insurance.
- Directors and officers liability insurance.
- Employee practice liability insurance.
- Health benefits for employees.
4. How do I know if I have the right insurance for my business?
The best place to start is by talking to your insurance agent. Business insurance professionals at Bank Midwest have experience working with a wide range of businesses, and understand the risks they’re exposed to. We’d be happy to answer any business insurance policy questions you may have.
To learn more about the types of business insurance you may need, check out our latest eBook. It reviews what you need to know about general liability, commercial auto, cyber insurance and more.
Sources:
https://www.iii.org/article/what-does-businessowners-policy-bop-cover