This week in the Freedom Friday blog and email newsletter, we're continuing the series 10 Steps to Take Your Small Business to the Next Level in 2023, and today we're discussing the ninth step to take your small business to the next level, which is to obtain business insurance. As a small business owner, you've made a significant investment in your small business. You developed a business plan, chose a business entity, obtained an EIN from the IRS, opened bank accounts, and so much more. All of this is essential, but it's critical to protect your business by obtaining insurance. There are four (4) types of insurance which you should consider as a small business owner:
Commercial General Liability Insurance
The first type of insurance which you should consider as a small business owner is commercial general liability insurance. This is an insurance policy which will protect your small business from a variety of different risks. It's a cost-efficient and effective way to keep your small business safe from unexpected costs of lawsuits, accidents, or other actions taken against your small business. Commercial general liability insurance will protect your small business if someone is injured on your business's property (or property you're renting) and will cover damage caused by you or your employees in some instances. When you evaluate commercial general liability insurance policies, you should be more concerned about obtaining good coverage rather than cost. A cheaper policy may expose your small business to greater risk. You should also make sure you understand the policy limits, premiums, deductibles, and exclusions. Also, always consider the reputation of the insurance carrier, making sure they're a licensed insurer (and that also goes for the broker if you're using one to obtain insurance on behalf of your small business).
Workers' Compensation Insurance
The second type of insurance which you should consider as a small business owner is workers' compensation insurance, and this type of insurance is mandatory if your small business has any employees. Workers' compensation insurance is a type of insurance designed to cover an employee's medical expenses and/or other losses from being injured on the job. Workers' compensation insurance will provide financial assistance to an injured employee, protect your small business in the event of a lawsuit, and minimize the risk of lawsuits from your employees due to work-related injuries.
Professional Liability Insurance
The third type of insurance which you should consider as a small business owner is professional liability insurance, also known as errors and omissions (E&O) coverage. Professional liability insurance is for small businesses that offer professional services, such as attorneys, accountants, architects, financial advisors, and many other professional occupations. Professional liability insurance protects your small business against claims of inaccurate, negligent, or undelivered work. If you or an employee make a mistake that costs your client money, your client might sue to recover those losses. Professional liability insurance will cover your legal fees for allegedly inaccurate work. If the work you provide does not live up to the standards of quality set by state laws, industry norms, or contractual obligations, your client could sue your small business for negligence, and professional liability insurance can cover claims arising from that alleged negligence. Contracts for professional services can also have clauses regarding the effects of the client's business after the work is completed. If a certain level of sales or profit isn't reached, the client might sue your small business for undelivered results, and professional liability insurance can cover such claims.
Business Interruption Insurance
The fourth type of insurance which you should consider as a small business owner is business interruption insurance. Business interruption insurance provides coverage for when your small business operations are interrupted by unforeseen circumstances, such as damage to the business's property, or a personal injury to the small business owner. When you're evaluating business interruption insurance policies, you should consider the unique risks faced by your small business, based on your industry and location. Not all business interruption events will be covered. You also should consider the time it will take to get your small business going again after the interruption, and make sure the policy covers your small business for an appropriate amount of time. Lastly, online businesses are susceptible to cyber security attacks, and if you own an online business, you need to make sure the business interruption insurance policy will cover cyber threats.
Thinking about starting a small business? Or maybe your small business is having issues with contracts, leases, business partners, collection issues, or experiencing other barriers to growth? Please contact me at [email protected] to schedule a FREE strategy session.
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