Business owners are exposed to risks before the ink is dry on their first business card. These risks start even before you hire your first employee. Having the right business insurance in place right away is more than a smart strategy. It’s essential. You don’t want to let a single lawsuit or catastrophic event wipe out your business before you’ve even gotten started.
Luckily, there are a wide range of insurance policies you can use to protect your business. Your local insurance agent is always the best source for advice about the particular policies and coverage your business needs. However, almost every business will probably need some form of all the following policies:
1. Business Interruption Insurance
In California, it’s important to prepare for catastrophic events like earthquakes, wildfires, and mudslides. Even if your office or home isn’t damaged by a natural disaster, your regular business operations could be interrupted. While your business is interrupted, you’ll lose money every day your staff is unable to come into the office, create products, or make sales calls. If you’ve got business interruption insurance, you’ll be reimbursed for your lost income. Don’t get caught without it.
2. Professional Liability Insurance
Also known as errors and omissions insurance, professional liability insurance covers negligence claims from harm caused by mistakes or failure to perform. There are no one-size-fits-all policies for this type of insurance. It’s important to talk to your business insurance agent to get the plan that suits your company.
3. Vehicle Insurance
Company vehicles need to be fully insured to protect your business against liability in the event of an accident. You should at least carry insurance that covers third-party injury. However, a comprehensive policy will cover damage to your vehicle as well. If your employees use their own cars for business, in most cases their personal insurance will cover them. However, their insurance probably won’t cover them if they are delivering goods or services for a fee. To avoid tricky, unusual circumstances, be sure to describe your business operations in detail with your insurance agent.
4. Property Insurance
Property insurance is essential, whether you own or lease your space. The right policy can cover your equipment, signage, inventory, and furniture in the event of fire, storms, or theft. Be careful, however, when selecting coverage. Catastrophic events like floods or earthquakes are not typically covered. Check with your business insurance agency to find out more about a separate policy to cover mass destruction events.
5. Product Liability Insurance
If your business creates products for sale on the consumer market, you definitely need product liability insurance. Even if you take every possible precaution to ensure your products are safe, you could still be named in a lawsuit due to damages caused by your product. Having a product liability insurance policy will protect you if there’s a lawsuit. Remember, even a frivolous lawsuit needs to be defended, and hiring a lawyer is never inexpensive. Ask your agent to tailor your policy coverage to your specific type of product or service to save money on premiums.
6. Workers Compensation Insurance
You should add workers compensation insurance to your business insurance policy portfolio as soon as you hire your first employee. Workers compensation insurance covers medical treatment, as well as disability and death benefits if one of your employees is injured, or dies while on the job. Even if you feel your employees perform low-risk work, it’s smart to buy coverage for things like slip-and-fall injuries or medical conditions.
7. Home Based Business Insurance
Many entrepreneurs begin businesses in their homes. However, homeowner’s policies don’t typically cover home-based businesses the way commercial property insurance would. If you’re working out of your home, consider a business insurance policy that covers your equipment and inventory. Even a brand new business will have a substantial amount of equipment that could be lost due to a fire or burglary. Home based business insurance will get you back in business right away.
It’s important for you to have the right types of business insurance in place to avoid major financial losses. If you’re in the Los Angeles area, call Susan Fujimoto at Harmony Health Insurance Services for a free analysis of the types of insurance you need. Harmony Health Insurance is proud to be your friendly neighborhood insurance agent.