Insurance is important for any business, especially for newer ones in the industry. However, it can be tough to determine which insurance policies will help your company grow. This article will explore all sorts of business insurance and how you can use them to grow your company.
Many small businesses believe that insurable damages cover them. However, only about half of these businesses actually have disaster-related insurance policies. That means that most of these businesses can easily lose more than $50,000 of their hard-earned money if a disaster does hit like a flood. This amount of money can be shrugged by bigger companies, but not by smaller companies.
If you’re a first-time business owner, you must get acquainted with all sorts of business insurance. It’s important to take note that not all of these insurance policies will work with your business. It depends on which industry you are in and how you work your business. Regardless, it’s important to note the business insurance policies on this list if you want to save your business from eventual disaster.
If you’re in the realm of the service industry (e.g., wedding planners, consultants, and cleaners), then you’re going to need E&O insurance. E&O insurance means Errors and Omissions insurance, and it protects you from all sorts of lawsuits made by clients. Since not all clients you’ll have will enjoy your services or some will think that you charge way too much for your service, then you should have this kind of policy on hand.
It’s important to know that there are situations where this particular policy will only cover partial costs of the given lawsuit. This depends on the nature of the lawsuit, how it is proven in court, and your insurance policy.
To set one up, you’ll have to look for an agent specializing in E&O insurance. You can find one by looking into insurance companies on the internet. You can also ask a local insurance company for one. Not many business insurance policies have this, so make sure to check if you’re part of the service industry.
Employer’s Liability Insurance
We highly suggest you get this form of insurance if you’re part of the manufacturing industry or if your business has more than 25 employees. Essentially, employer’s liability insurance covers all sorts of injuries that happen inside the workplace. Considering that more than two million workplace injuries happen every year, regardless of the industry you are in, this insurance policy is important for every company.
Work-related injuries can cost your company thousands of dollars. If you have at least three of them every year, it will cost you around $20,000 on average. Employer’s liability insurance will ensure that you never have to spend this amount of money. We don’t suggest you get it if you have less than 25 employees. Still, because some insurance companies now offer COVID-19 related illnesses in their employer’s liability insurance, then it’s worth getting one right now.
Product Liability Insurance
Another essential for the manufacturing industry and for companies that sell and make products of all kinds. It is the same as the previous insurance policy we explained, but this time it’s related to products. If your products have even the smallest chance of causing harm to consumers, then we suggest you have this insurance policy every year or have warnings regarding your products on the packaging. But remember that you can’t cover all hazards of your product if you’re new to the industry.
Additionally, product liability is important for online resellers or any companies related to e-commerce. Since most of your business transactions will rely on products and delivery, this will cover situations of product theft and damaged products during delivery.
Since online businesses are booming right now, and almost every company have a website of their own, we recommend you to have cyber insurance. There are many forms of cyber insurance, and there are way too many to cover on this list. Still, essentially, you’ll want cyber insurance that covers unwanted online breaches, hacking, and other forms of cyberattacks.
Cyber attacks are happening way too often, and most of these attacks target online businesses. If you rely on your website or have a website for your business, we recommend having this insurance policy.
The general rule of thumb for investing in insurance is spending 20% to 30% of your annual gross sales on it. Spending lower means that you’re expecting fewer disasters this year (a dangerous proposition). Spending higher means that you’re expecting more disasters this year (e.g., repeated temporary closures due to the pandemic.) The amount you spend will depend highly on your umbrella insurance.
Umbrella insurance will be the one that will save your company and help it grow in the future. Essentially, umbrella insurance is a policy that will be enacted if other forms of insurance policies fail. This means that you will not be left with zero if the business insurance does not cover particular damage. You should get this insurance policy if you have at least two or more insurance policies for your business. It will ensure that you will always have enough after a disaster.
These are different forms of insurance you should have in your business if you want to avoid disasters. This will be important for the growth of your business in the future, even if your business is primarily online. So make sure to have a couple of these insurance policies on hand.