Whether you’re opening a new business or reevaluating your coverage after a loss, building the right insurance package for your business can be a daunting task. There are dozens of insurance carriers, policy types, and coverage limits to choose from, and one wrong decision can have serious repercussions during a claim scenario.
Do you need help choosing the perfect combination of insurance for your small or medium-sized business? Start by reading our comprehensive guide.
Although each company has different insurance needs, there are a few essential coverages that nearly every small business should have. These are the policies you should start with when building your insurance package.
Every business faces liability risks related to hiring employees, performing services, selling products, or owning property. These risks can lead to accidents or negligent acts, resulting in a lawsuit against your company. If you end up in court defending your business against a liability lawsuit, general liability insurance helps pay for damages and related fees. As a result, general liability insurance is a must-have coverage for small businesses, because it protects them from significant and irreversible financial damage.
General liability policies contain three coverages: personal and advertising injury, bodily injury and property damage, and medical payments. Personal and advertising injury coverage pays for lawsuit costs if you damage another business by infringing on their intellectual property or by spreading false information. Bodily injury and property damage coverage protects your business if a customer sustains an injury on your premises or if you damage their property while working. Finally, medical payment coverage attempts to prevent lawsuits by paying for customers’ medical bills up to a specified amount following an injury.
No matter how small your business is, you probably own or rent property of some sort, whether it’s one computer or an entire office building. You never know when an unexpected storm, fire, or theft will cause thousands of dollars in property loss or damage, but you won’t have to deal with the financial repercussions if you have a property policy.
Commercial property insurance covers various types of property, including buildings, office equipment, furniture, computers, fences, signs, and documents. Your policy will pay to repair or replace items after a covered loss event. Some policies also include business interruption insurance, which reimburses your company for lost income if you have to halt operations after sustaining property damage.
Some businesses choose to combine their property and general liability insurance in a business owner’s policy. These policies are designed for small business owners who want to reduce premium costs and avoid unnecessary coverages.
Nearly every state requires commercial auto insurance for businesses with at least one registered vehicle. Even if you don’t need auto insurance for legal reasons, you still need it if you or your employees operate a motor vehicle during work hours, regardless of whether your company owns the vehicle.
Property damage costs and medical bills can easily reach six figures following a bad accident, and your business could be liable for the damage. Auto insurance pays for legal expenses, repairs to the other driver’s car, medical payments for you and your employees, and property damage to your vehicles.
General liability insurance only covers certain losses related to property damage, reputational harm, and bodily injury. To cover your other risks, you may need additional liability coverage, including:
- Workers’ compensation: Your general liability policy doesn’t pay for medical costs if your employees sustain an injury on the job. If you want to protect your employees from financial loss after a work-related injury or illness, you need workers’ compensation insurance.
- Professional liability: Businesses that offer professional services to clients may face lawsuits related to missed deadlines, errors, or breached contracts. Professional liability insurance covers the defense and settlement costs associated with these service-related lawsuits.
- Cyber liability: One data breach can lead to lost business income, client lawsuits, compromised technology, and severe reputational damage. With a cyber liability policy, you don’t have to worry about the financial aftermath of a cyberattack.
Even if you have high limits on all of your liability insurance policies, one particularly bad accident or lawsuit could exhaust those limits, leaving you on the hook for the remaining costs. If you want to add an extra safety net without increasing your limits on every policy, commercial umbrella insurance is the perfect option. Umbrella insurance sits over your auto, general liability, and workers’ compensation policies to provide extra coverage when needed.
While property, general liability, workers’ compensation, commercial auto, and umbrella policies are sufficient to cover most business risks, you may need extra coverage specific to your industry. Two of these industry-specific coverages are medical malpractice and technology errors and omissions insurance.
As a medical provider, you improve patients’ lives by performing surgeries and diagnosing complicated issues. However, for every hundred success stories, you may have one or two procedures that didn’t go according to plan. If those patients sue your practice, your malpractice policy will pay for the legal fees and settlement costs.
Information technology (IT) providers face a unique predicament: they offer products and services and face risks related to both. Neither general liability insurance nor standard professional liability insurance fully covers those risks. As a result, insurance companies created technology errors and omissions (E&O) insurance to address IT providers’ insurance needs.
Technology E&O insurance pays for lawsuit costs if a client sues their IT provider for damages related to their products or services, such as software or custom website code. For example, if you sold faulty software that caused a client to lose critical business data, your technology E&O policy would help you defend your business in court.
Finding the right business insurance can feel like a full-time job. After determining your coverage risks, you have to choose which policies work for you and decide on limits and deductible amounts. From there, you need to get in touch with different insurance companies and find the best coverage for your budget. Once your policies are in place, it’s your job to notify your insurance carrier every time your coverage needs to change. If doubling as your own insurance agent seems like too much to handle, Southpoint can help.
As a full-service business insurance agency with over five decades of experience, Southpoint offers unrivaled expertise to companies in Chicago and across the nation. Whether you’re a small business in need of a simple package policy or a medical provider with a long list of risks, our insurance experts can handle your insurance needs.
We use our long-term relationships with insurance carriers to find the most affordable policies without sacrificing coverage. When you need to add a new policy, change your coverage, or file a claim, you can call one point of contact and get an immediate resolution. Instead of juggling different agents or working with a team that doesn’t understand your business, partner with Southpoint.
Get in touch today to request a business insurance quote or learn more about our commercial insurance options.