Choosing A Great Insurance Policy

Four Insurance Policies Every Small Business May Need

Owning and operating your small business is fraught with perils. It is a litigious society, and leaving yourself unprotected can lead to a legal nightmare. Being properly insured, with the right types of insurance, can help you assuage the risks. Here are the basic types of insurance every small business owner should carry.

Errors And Omissions Insurance

Also called professional liability insurance, errors and omissions insurance protects providers of professional services from negligence claims by their customers. The insurance covers any inadvertent errors made on the part of the provider. For example, a tax accountant may make an innocent mathematical error that causes subsequent difficulty with the Internal Revenue Service. Each situation is unique, therefore the way each policy is underwritten will be unique as well.

Workers' Compensation Insurance

A sole proprietorship is a much simpler business model when it comes to the laws and regulations that must be followed, but it also provides for limited growth, and the risks are multiplied as the business is not separated from the person. The majority of businesses are set up as their own separate legal entity, and this also allows the business owner to hire employees. The moment you hire employees, however, you are at risk of being held legally responsible for anything that happens to your employees while on the job. Workers' compensation insurance will cover any accident claims that result in injury as well as accidental death on the job. This insurance will also cover any medical expenses that result of said injury.

If you choose to not hire employees and stay set up as a sole proprietorship and work from home, you still need an additional rider to your homeowner's policy to cover anything that is specific to your business, such as inventory or office supplies.

Product Liability Insurance

If you manufacture any type of product, product liability insurance is an absolute must. It doesn't matter how safe you believe your product to be or the steps you have taken to ensure quality control. Selling a product to the general product of any kind can put you and your business at risk for a lawsuit. Like errors and omissions insurance, the policies underwritten vary depending on the industry.

Business Interruption Insurance

This is insurance that covers businesses that have a physical location from which they manufacture products, have retail operations, or supply services. If something happens, such as a natural disaster, that prevents you from continuing your operations, business interruption insurance can bridge the gap of lost income during a qualifying event.