What Is Small Business Insurance?

Regardless of industry, small businesses may require at least these four types of insurance:

• Property coverage - Protects against covered loss to the business property.

• Liability coverage - Protects against claims for bodily injury or property damage resulting from the business’s operations.

• Commercial auto insurance - Can protect against the business’s liability arising from a motor vehicle accident, as well as the cost to repair or replace a damaged vehicle owned, maintained, or used by the business for business purposes.

• Workers’ compensation insurance - Ensures employees injured on the job receive appropriate, approved medical treatment and a portion of lost wages for time out of work.

Owners of specific business types should also consider their industry-specific needs. For example, carpentry and electrical contractors have different insurance needs than real estate agents and florists.

What products provide liability coverage for small businesses?

These package policies provide general liability insurance, along with other coverages small businesses need:

• A Businessowners Policy (BOP) is a combined policy that includes protection for both property and liability risks. A BOP can also provide business income insurance and industry-specific coverages. This is the most common product chosen by small business owners.

• Commercial Excess and Umbrella Insurance provides higher limits on top of a business’s underlying liability insurance policies and, in some instances, provides coverage for certain risks not covered under the business’s underlying liability insurance policies.

What products provide property coverage?

Property coverage is usually provided as part of a businessowners policy or commercial package policy. These policies can help protect the building itself and the business’s property, as well as loss of use if the building becomes unusable after a covered loss.

Small business owners with only one building should consider a BOP. Those with multiple buildings should talk to their agent about the benefits of a commercial package policy (CPP).

Does your business need workers’ compensation insurance?

In most cases, workers’ compensation insurance is required by law. This is to ensure that employees who are injured on the job are covered for lost wages, medical expenses, or benefits payable to the employee’s family in the event an injury results in death.

A workers’ compensation insurer may provide additional resources to businesses, including loss prevention tools, fraud prevention measures, legal support, and medical management.

Does your business need commercial auto insurance?

If the business operations use a motor vehicle, the business should have commercial auto insurance. Commercial auto helps cover the business’s liability if an employee causes an accident while working on behalf of the business.

In addition, if the business owns the vehicle, comprehensive and collision coverage can help cover the cost to repair or replace it if it becomes damaged. It can also provide for the cost of a replacement auto so the business can continue operating while the vehicle is in repairs. Some insurance companies also offer roadside assistance coverage for business vehicles.