To a small business owner with funds already severely short, insurance might not look like an immediate need, but it is one of the most important types of protection you can get for your business. Insurance helps recoup costs for tangible investments like machinery and raw material you need to keep the business running should damage occur. Insurance also protects your intangible assets like intellectual property from possible claims.
The most important type of insurance you need for you small business is liability insurance. This is the type of insurance that protects you in the event you get sued. There are three important types of liability insurances; general liability, product liability, and professional liability.
1) General liability
This type of insurance protects you when you get sued because of accidents or injuries. If your employee suffers an injury while on duty, general liability insurance will help you cover compensation and related costs.
2) Product Liability
Product covers you in case your product malfunctions or is defective and causes harm to the consumer.
3) Professional liability
This type of insurance applies more to service businesses, and it protects your business in case of negligence or errors in service, which causes your stakeholders and inconvenience.
There are many other types of insurance you should get for your business, but you should always make sure your policy covers all types of liability insurance, in order to avoid lawsuits, which could cripple your business before it even takes off.
Some insurance policies offer wide coverage, combining various types of insurance. For example, the business owner’s policy (BOP) usually covers property, casualty, liability, and business interruption insurances. This type of policy is best for small businesses as it gives you a wider coverage, while saving you money, as you won’t need to pay premium for each type of coverage.