Before you make your first sale or even provide your first consultation for your small business, you’ll want to think about insurance. In considering your risks and vulnerabilities as a small business, you’re better able to access the coverage you need to keep your business strong in the face of adversity. Just as all businesses are different, each will have its own insurance needs.
The options below are just a few of the insurance policy types you may need to consider:
General liability insurance: Many business owners know that general liability insurance is important in the event that a customer or other visitor gets injured while on your business property. The other side of liability insurance protects you or your employees against claims by clients. If you visit clients, have access to privileged business documents or share information publicly about your clients, you’ll want to be sure to have a general liability insurance policy.
Property insurance: This insurance covers any buildings your business occupies and its contents - although you may have to specify coverage for specialized equipment or technology. Even if you rent or lease your business location, you may still be required to carry a certain amount of property insurance as per your lease.
Business interruption: This is a common addition to a larger policy, like a general liability policy. It protects you if your businesses is affected in such a way that it can’t operate - for example, after a storm that knocks out your phone lines for an extended period. There’s usually a waiting period, though, before your interruption coverage kicks in after an event.
Professional liability Insurance: Some business owners may overlook this coverage, but it’s increasingly important for solopreneurs providing creative services to clients. Professional liability insurance protects your business if you’re sued for negligence or personal injury. This coverage also provides for your defense costs. If you regularly advise clients, you’ll want to consider this insurance.
Cyber liability insurance: Insurance against cybercrime should not be a substitute for proactive cybersecurity measures in your small business. In fact, you may need to prove your current measures against data breaches and other online crimes before a carrier will grant you a cyber liability policy.
Other insurance considerations for your small business
Keep in mind that some events are not covered by basic insurance policies and require specialized coverage. Coverage from earthquake damage or terrorism will likely be an additional charge on your policy. Flood protection (beyond coverage in the event of sewer backup) is administered by FEMA’s National Flood Insurance Program.
The insurance policies reviewed above do not highlight coverage if you have employees. Hiring staff members will require carrying worker’s compensation insurance and perhaps offering health or other benefit policies for your employees.