Starting and operating a small business involves evaluating many risks and making decisions to protect against them. As a small business owner, having the right insurance coverage is essential to avoid potentially devastating losses. In this article, we’ll explain the key types of insurance policies and why they are crucial for small businesses.

General Liability Insurance Safeguards Against Common Risks

General liability insurance should be considered mandatory for nearly every small business. It protects against third party claims of bodily injury or property damage that occur on your business premises or are caused by your operations or products. For example, if a customer slips and falls in your store, or your product malfunctions and damages someone’s property, general liability insurance helps cover the legal fees and any damages awarded in a resulting lawsuit.

Typically, $1 million per occurrence and $2 million aggregate limits are recommended as a minimum. But higher risk industries like construction may require more. Discuss your needs with an agent.

Reduce Your Exposure With Professional Liability Coverage

For businesses that provide services, advice, or designs for a fee, professional liability insurance is crucial. Also known as errors and omissions insurance, it covers financial damages resulting from mistakes you make or negligent actions taken in your professional capacity.

Common examples include consultants, accountants, architects, engineers, insurance agents, lawyers, real estate agents, therapists, digital marketers, and others. If your small business falls into these professions, having at least $1 million in professional liability coverage is wise. Be sure reputation damage costs are considered too.

Protect Customers and Your Business With Product Liability Insurance

Any small business that is involved in manufacturing, distributing, wholesaling, or retailing a product needs to strongly consider product liability insurance. It protects against bodily injury or property damage claims caused by issues with products you sell or produce.

Say a child chokes on a small toy part produced by your company. Or a grill you designed explodes and destroys a customer’s deck. These types of situations could devastate your small business without adequate product liability insurance, which usually starts at $1 million per occurrence minimum.

Guard Against Costly Data Breaches With Cyber Insurance

In today’s modernized and innovative world, cyber insurance is growing increasingly important, especially for ecommerce companies. It helps cover costs related to data breaches, including:

• Notifying customers
• Providing credit monitoring services
• Hiring cyber investigation experts
• Restoring and recreating lost data
• Paying regulatory fines and penalties
• Managing reputation damage

Cyber insurance can be purchased as a stand-alone policy or added to your general liability policy, with recommended limits of at least $1 million. Review your risks for higher coverage needs.

Workers’ Compensation: Mandatory for Businesses With Employees

Workers’ compensation insurance provides medical, disability, and death benefits to employees who suffer job-related illnesses or injuries. It also covers a portion of lost wages.

This type of insurance is mandatory for nearly all employers in the U.S., excluding sole proprietors, partners, and LLC members in most cases. Both full-time and part-time employees must be covered. Policy premiums vary based on your state and the type of work employees perform. Be sure you have adequate coverage.

Safeguard Your Assets With Commercial Property Insurance

Damage to your office, retail store, restaurant, equipment, furniture, and other contents can put you out of business if you’re not properly insured. Fire, theft, vandalism, severe weather, and other hazards make commercial property insurance essential for small businesses of every kind.

At a minimum, insure your business equipment and contents. But also consider business income or extra expense coverage to pay operating costs if your premises become unusable. Meet with an agent to determine enough coverage to completely rebuild and replace all insured assets.

Don’t Drive Uninsured – Commercial Auto Coverage is Crucial

If your small business owns any type of vehicles that are used for commercial purposes, commercial auto insurance is legally required. This includes traditional company vehicles, as well as personal cars used for delivery services like food delivery or real estate agents.

At Mountain Plains Agency Inc., we ensure clients have adequate coverage to protect their business assets and livelihood in case of an accident. This starts with $1 million minimum liability limits. Collision and comprehensive coverage are optional based on your risk tolerance.

Combine Essential Policies in a Business Owner’s Policy

A convenient way to get essential property and liability coverages for many small business types is through a business owner’s policy (BOP). This package policy combines:

• General liability protection
• Property coverage for your office, equipment, furniture, and inventory
• Business interruption insurance in case you must temporarily close

Popular with retail shops, restaurants, professional services firms, and more, a BOP can provide significant savings compared to individual policies. But thoroughly review risks for gaps.

Don’t Overlook Coverage for Business Interruptions

Even with property insurance, severe damage to your premises can put you out of business for an extended time. Business interruption insurance helps replace income lost while your operations are suspended due to covered events.

Any small business at risk of temporary closure from disasters like fire, floods, or tornadoes should strongly consider this coverage. The specific time period and dollar amount of coverage depends on your potential losses.

Protect Your Company from Loss of Key People

Unfortunately, the death or long-term disability of a crucial owner, executive, or top performer can financially destroy some small businesses. That’s where key person insurance comes in.

Also called key man insurance, it compensates your company for losses incurred if certain “key people” die or can’t work. It makes most sense for small businesses highly dependent on the expertise and skills of just a few individuals.

Work with an agent to determine appropriate coverage amounts based on the key person’s economic value to your company.

Let Us Find the Right Insurance Mix for Your Growing Business

As you can see, having adequate insurance is vital for any small business owner. Work with us with our independent agents at Mountain Plains Agency Inc. to evaluate your risks and get quotes for customized policies designed to protect your company as it evolves.