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Types of Small Business Insurance Every Business Should Know

Types of small business insurance

Starting a new business is a big deal. It’s exciting and full of possibilities. To move forward confidently, it’s crucial to know about the types of small business insurance that protect your work from costs that unexpected events, like legal issues, damage, or business interruptions, might cause.

This article will guide you through the different types of small business insurance to think about as you set up your business.

We’ll dive deep into the key insurance policies every small business needs. These policies help your business grow steadily and successfully.

Start Your Business in 30 Days Even If You Don't Have An Idea
Start Your Business in 30 Days Even If You Don’t Have An Idea

See Also: How to transition from idea to starting your business in 30 days.

Types Of Small Business Insurance To Consider

Here are the types of small business insurance to consider as you run your business.

Business Liability Insurance

Every entrepreneur needs solid general liability insurance. It’s your shield against many common business risks. It helps handle costs if someone’s property gets damaged at your place or if someone outside your company gets hurt. It pays for their medical bills and any lost income.

This policy also looks out for risks that are harder to see but still important, like harm to your reputation, confusing ads, or copyright problems.

With general liability insurance, you protect your business’s money. It takes care of legal costs and damages so these troubles don’t shake up your company’s finances.

Before doing business with you, people like banks, property owners, and government agencies often want to see your insurance. Having it ready shows you’re serious about managing risks.

The cost? It’s about $42 a month—a small price for a big peace of mind.

More than just protection, good liability insurance proves your business is solid and ready for the unexpected, keeping you on track for success.

See Also: The importance of safeguarding your health as an entrepreneur.

Commercial Property Insurance

Commercial property insurance is a critical safeguard for your small business’s premises, ensuring that both the structure and the contents—including office equipment, computers, and furniture—are secure. This coverage is comprehensive and embraces both owned and leased items.

This policy encompasses a broad range of items essential to your business operations. It ranges from tools and inventory to essential documents and outdoor signage. It’s designed to offer a safety net against various risks. The risks include extreme weather events, theft, and vandalism, that can threaten your business assets.

On average, the cost of securing such a policy is around $63 monthly, a small price for the significant coverage it provides.

In essence, commercial property insurance is indispensable, offering extensive protection for your business space and assets. It ensures that, in the face of disasters that could otherwise be debilitating to your financial health, you have the support to restore and move forward.

Business Interruption Insurance

Go from idea to starting your business in 30 days
Go from idea to starting your business in 30 days

Business interruption insurance, also known as business income insurance, is essential for continuity in times of crisis. It compensates for income lost when operations are halted due to covered incidents like fires or severe weather. The policy also takes into account theft and accidents that could damage your business assets.

This coverage is not only a buffer against the immediate loss of income. It also assists with extra costs incurred, such as relocating to a temporary site. With monthly premiums ranging approximately from $40 to $130, investing in business interruption insurance ensures that your enterprise remains financially stable through unexpected closures and disruptions.

See Also: Why every business owner needs a business insurance.

A Business Owner’s Policy

A Business Owner’s Policy (BOP) is a comprehensive insurance package that consolidates general liability, commercial property, and business interruption insurance into one economical option. This trio provides extensive coverage at a cost-saving price compared to purchasing each policy individually. Typically, a BOP is priced at an average monthly cost of $53.

Small to mid-sized businesses, especially those with a workforce of no more than 100 people and annual revenues up to approximately $5 million, find a BOP particularly fitting. This bundled insurance solution delivers a broad range of protection at a value that aligns with the budget and needs of growing businesses.

Commercial Auto Insurance

If your business uses cars, trucks, or vans, you need commercial auto insurance. It covers vehicles that regular personal insurance doesn’t. This way, you won’t have to pay out of your own pocket if there’s damage or an accident on the job, which can get really costly.

Commercial auto insurance usually costs around $142 a month.

Also, make sure to get non-owned auto liability insurance if your team uses personal or rented vehicles for work. It protects against claims from business driving, filling in gaps left by personal insurance, and keeps your business safe from the costs of any car accidents.

Cyber Liability Insurance

In today’s digital age, cyber liability insurance is essential for small businesses. It provides a safety net against the financial burdens that arise from cyber incidents. If a data breach results in compromised customer information, this insurance assists with related expenses, including legal costs and communicating with affected customers, even extending to services like credit monitoring.

For small businesses, the average expenditure for cyber liability coverage hovers around $140 monthly. This is a small price for the security it offers in safeguarding against online risks. This type of policy is becoming a non-negotiable part of business operations in a world where digital presence is the norm. It covers essential post-breach responses and associated costs.

See Also: List of licensed insurance companies in Nigeria.

Errors and Omissions Insurance

If you run a small business that provides specialized advice or services, it’s smart to get errors and omissions (E&O) insurance, also known as professional liability insurance. It helps pay for problems like giving out wrong advice or not doing your job properly.

E&O insurance covers costs if someone sues you—things like paying them back, covering your lawyer’s fees, or any court decisions against you.

People like accountants, marketers, and IT pros often need this insurance.

It costs about $59 a month, which is a good deal for keeping your business safe from the cost of legal issues over the services you provide.

Technology Errors and Omissions Coverage

For those in the tech sector, specialized errors and omissions (E&O) insurance is available to address the unique risks associated with this industry. This coverage is essential for handling legal fees and related expenses that arise if a client files a claim against a tech-focused business.

This tailored E&O insurance benefits a range of professionals in the tech world, including:

  • Computer consultants
  • Providers of Internet services
  • IT contracting professionals
  • Software development experts
  • Website development specialists

Typically, the cost for this niche insurance protection is around $60 each month.

This policy is crafted to cover claims related to the provision of technology services or advice, including issues like software glitches or challenges in delivering projects as promised.

See Also: Everything you need to know about business registration in Nigeria.

Commercial Umbrella Insurance

Commercial umbrella insurance acts as a safety net for your business, kicking in where your standard liability coverages max out. For instance, if a legal claim surpasses your existing business liability coverage—say a claim is for $1.2 million and your policy caps at $500,000—this insurance would address the remaining $700,000.

The amount of umbrella coverage you opt for, along with your business’s risk profile, will influence the cost of this insurance. On average, securing an extra million dollars of coverage is estimated to cost about $40 monthly. This kind of policy is a strategic move to shield your business from severe financial impacts that could arise from major claims.

Workers Compensation Insurance

Once you hire someone, it’s crucial to get workers’ compensation insurance. It pays for any health issues or injuries your employees get from working, covering their medical bills, lost pay, and disability benefits.

For most small businesses, this insurance costs about $47 each month. In many places, it’s the law to have it. It helps look after your team and keeps your business safe if an employee gets injured at work.

Other Types of Small Business Insurance

Small businesses might require various specialized insurance plans to address specific risks:

D&O Insurance: This covers your company’s leadership against claims stemming from their governance decisions. Legal costs arising from lawsuits filed by stakeholders alleging mismanagement fall under this policy.

Inland Marine Insurance: Ideal for businesses that transport goods overland, this insurance compensates for losses due to damage or theft of products, materials, and equipment in transit.

Product Liability Insurance: If your business manufactures goods, this insurance is crucial, protecting against claims of harm caused by your products.

Builder’s Risk Insurance: Also known as construction insurance, this covers structures in progress, ensuring that the investment in ongoing builds is protected.

The article discusses various types of small business insurance business owner should know. It explains the need for insurance to protect against usual risks and gives tips for choosing specific insurance for jobs like online security or business management. If you run a business and you want to have a global outlook, you should know these types of small business insurance so you can protect yourself. The key idea is to prepare small businesses for any surprise issues.

How We Can Help You Register Your Business And Comply With Taxes Monthly

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Should your business require our ProMAX Compliance Service, which includes account preparation, auditing, and TCC filing, please contact us directly. This premium service is tailored to your specific needs and billed upon request.

Why Choose Our Compliance Services?

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Get in touch today by clicking the Contact Us page or sending us a message on WhatsApp: 08038874148 or 08188122223.

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If you want to work with me to start a profitable and sustainable business, then enrol in the Start Your Business in 30 Days Program. I will take you from idea to starting your business in 30 days. At the end of the program, you will get a registered business with CAC, logo and brand assets, admin set-up, one-on-one consulting sessions and more. Click here to enrol.

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