The rewards of owning your own business far outweigh the risks — particularly if you protect yourself from as many risks as possible with a comprehensive insurance plan. These are the five types of insurance you should consider for your business:
1) Supplemental rider to homeowner’s insurance.
If you run a home-based business, you likely need to supplement your homeowner’s or renter’s insurance with an additional rider to fully protect your business from loss. If you don’t have this, you are putting your home and business at unnecessary risk. “Using the home for other purposes that your insurer is not aware of, such as operating a home business, may invalidate your policy,” states award-winning business writer and former business education teacher Susan Ward in an article for TheBalance.com.
Talk to your homeowner’s insurance policy provider to ensure that you won’t invalidate your policy and to determine whether it offers supplements for people who work from home or have a business entirely from home.
2) Liability insurance.
Even if you work entirely from home and obtain a rider to your homeowner’s policy, you should be aware of what it does and does not cover. More specifically, you should investigate the liability insurance that your work situation and field requires. For example, if clients visit your home for business, you need liability insurance in case they become injured while at your home. General liability and professional liability insurance are two types of insurance you should investigate with your provider.
3) Business owner’s policy.
A Business owner’’ policy (BOP) is a great place to start when first shopping for insurance, whether your business is home-based or not.
“A BOP combines typical coverage options into a standard package, and is offered at a premium that is less than if each type of coverage was purchased separately,” says the U.S. Small Business Administration. “Typically, BOPs consist of covering property, general liability, vehicles, business interruption and other types of coverage common to most types of businesses.”
Although a BOP simplifies the process of buying insurance and can save you money on premiums, you may need additional coverage if your business carries heavy risk in a certain area.
4) Property insurance.
This type of insurance protects the physical structure of your business and the assets located within it from loss or damage. Policies can either be all-risk or peril-specific. Even an all-risk policy has exceptions, however; but those are specifically listed and described in the policy, so you’ll know exactly what is covered. If there is a high risk of a certain type of damage in your area, it may be excluded from your all-risk policy, requiring you to obtain additional coverage. A common example of this is flood insurance in coastal areas. Your insurance agent can help you determine what risks are most likely to occur in your location in order to assess whether you should add peril-specific policies to your coverage plan.
5) Business auto insurance.
If you are required to drive for work, you may need a business auto policy to cover instances when an accident occurs during driving required to conduct business. Your current auto insurance provider can help you determine if this is needed or if your current policy is sufficient.
The U.S. Small Business Administration offers an in-depth guide to these types of insurance and more, which you can find at https://www.sba.gov/managing-business/running-business/insurance.