From the first stepping stone to its entire life span, a business faces different types and amount of risks. These factors could be the real deal breaker and can harm the business extensively. Business insurance plays an important role in guarding a business’s future against losses. It protects your business’s assets, income and property from liability that may occur during the operation of a business due to unseen incidents. Business insurance saves your business’s future by minimalizing or eliminating financial loss. In a layman language, often referred to as commercial insurance, business insurance is a cushion that protects any business from bad times and liabilities. In present-day business scenario, there are wide varieties of business insurances depending on the nature and risk appetite of a business. Below mentioned are the essential three types of business insurance policies required for any small business-
- Business property insurance
- General liability insurance
- Business income insurance
A small business can plus and minus more types of insurance in their business insurance portfolio, depending on their business profile and needs. Deliberating further into the topic, let us understand different types of small business insurances, their features and benefits.
- Business property insurance
Kick-starting a business is a risky affair. To minimalize the risk factors, proper business property insurance should be in place beforehand. Any start-up can own its business property or lease its workspace. In both the scenarios it is essential to have effective business property insurance. Business property insurance protects the physical location of the business, whether owned or leased, from physical financial losses caused due to uncontrollable events, theft or mischief. Under this insurance, your office space, instruments, inventory, equipment’s, electronics, machines etc. will be covered, in case of fire, theft, and vandalism.
- General liability insurance
General liability insurance stands guard against the liabilities and claims made for e instances like any physical or bodily injury at your workspace. This insurance acts as a cushion against claims for any physical injury occurred inside your work location by any individual/ customer. For example, if one of your customers gets an electric shock due to an open wire in your store and claims for their medical treatment cost. General liability insurance will assist your business in covering up the cost of the claim and legal cost, if any. In a nutshell, general liability insurance helps your business in covering the extra cost caused by any claimant for mishap or accident inside your workspace. This general liability insurance is subject to limitations of amount of claim and number of claims.
- Business income insurance
Business income coverage or Business income insurance shields a business against any losses caused due to uncertain conditions or incidents. This amazing business owner’s policy provides coverage to any new or old businesses in such circumstances, in which it is unable to perform its normal business and generate income. Business income insurance comes under property insurance and assists a business in recovering the lost income and extra expenses occurred in any business due to hazard, external menace, uncertainty or liability. For example, in case of fire, the production of any xyz product is halted, business income insurance will help your business recover rent, renovation or replacement costs, if any.
Extending Your Small Business Insurance
As your business expands, so does your business insurance needs. Operating only with the above mentioned insurances might not eliminate total risk and financial losses. To trim out maximum risk and losses, your insurance portfolio needs to develop and broaden its spectrum. Based on your business requirement, study, analyse and select appropriate coverage. Here are some add-on insurances that are often taken by small businesses-
- Workers’ compensation insurance
Workers’ compensation insurance offers legal protection to the organization from employee front. Workers’ compensation insurance offers coverage to employees against any injury, illness, mishap or even death due to work-related injury or illness. Combining the benefits of wage replacement, medical expenses and grave losses, this insurance protects the interest of the employees, and benefits are transferred to the employee or his/her family. This compensation insurance not only protects the well-being of the employees but also safeguards the business against any lawsuits. In exchange of these financial aids employees surrender their rights to sue the company in the event of any mishap. Several states have even made workers compensation insurance compulsory for businesses and even heavy penalties are levied due to non-compliance of the law.
- Commercial auto insurance
Commercial auto insurance or commercial vehicle insurance is a pre-requisite for trouble-free operation of your business. Depending on the size and scale of your business, whether you have a fleet of automobiles or just one loader truck, commercial auto insurance is both essential and mandatory. This insurance coverage provides security against any damage, both physical crash and bodily injury arising out of an accident. This dual protection insurance covers the cost of both repairing the physical damage of the commercial vehicle as well as any bodily injury resulting from the auto accident or collision. Under this dual protection insurance policy, all types of road vehicles are covered.
To function along with numerous high-risk factors, adequate and appropriate business insurance policies can minimise the extra financial cost due to uncertainties. Small businesses having less funds can select and utilise the services of critical insurance policies in their gestational period, and keep on adding the policies as their business spreads its roots. Modern day insurers are now providing commercial insurance policy packages under one legal contract. Also, business insurances can be customised according to the need and scale of the business. To cover a specific risk related to the nature of the business, an additional cover can be included in the company’s insurance portfolio. To sum it up, analyse and select a policy that suits the nature of your business. Focus on growth and be ready for unforeseen circumstances as business involves risk, unpredictability, profit and losses as well.
– Sumaiya Khan