Building a business is one thing, but it’s important to not get so caught up in growing larger that you neglect to properly safeguard yourself.
The main method of securing your business against anything that might go wrong is through a combination of various different insurance policies. Some types you’ll likely have heard of, but there are numerous specialised policies that can cover unique risks for your particular situation.
No matter what type of business you run, this article will provide you with a rundown of a wide variety of different types of insurance plans.
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Why Business Insurance Is Important
First things first – why do you need insurance as a business owner?
Any venture carries risks, and it’s often impossible to account for every eventuality. Essentially, business insurance acts as a safety net. It protects the owners from whatever unforeseen setback may befall them, whether it be accidents, damage to property, data breaches, and so on. If any of these problems were to occur, they could completely destroy a business financially and make for a situation that is unrecoverable. Insurance policies are there to provide you with the financial support you need.
Taking a Look at the Most Common Types of Business Insurance
First, here are the types of insurance policies most would deem essential – these are the most common types you’re most likely to come across or have heard of:
Public Liability Insurance
Public liability insurance protects a buisiness from any claim that’s made by a client or customer due to an accident that’s happened on your premises or indirectly because of your operations. For example, if a customer were to sustain a physical injury while using your shop, a public liability insurance policy would help cover the cost of legal fees and compensation.
If you’re interacting with members of the public or have clients that you see in person, this type of insurance is a must.
Employers Liability Insurance
Should you employ any staff at your business, employers liability insurance covers a claim made by your employees if they become injured or otherwise harmed as part of their work.
It is a legal requirement to have this type of insurance in most instances.
Professional Indemnity Insurance
Professional indemnity insurance covers negligence or errors that occur following a service you provide at your business. This type of insurance is typically used by accountants and consultants, as it covers your advice or services potentially causing financial loss for the client.
Other Types of Business Insurance
While the three types above comprise the main types of business insurance you’ll encounter, there are also other important types to consider for specific or more well-rounded coverage:
Product Liability Insurance
This type of insurance is specifically designed to protect businesses that manufacture or sell products. It works by securing the business if a product they made or sold were to cause harm to a customer.
Cyber Liability Insurance
Cyber liability insurance didn’t really exist in any meaningful capacity in the past, but in an increasingly digital age, it’s a must for some types of businesses. Essentially, it covers anything that can go wrong iwithin the digital realm, such as data breaches, cyber attacks, and so on.
Business Car Insurance
Commercial vehicle insurance for businesses is a must for anyone using a vehicle as part of their operations: this can include making deliveries as well as transporting goods and if you’re using a vehicle to drive to clients.
This type of insurance protects against any damage, theft, or accidents that occur during business operations, and policies typically offer add-ons like coverage for fleet vehicles or breakdown assistance.
Choosing the Right Insurance for Your Business
The above types of insurance plans – both common and additional – only represent part of all available options. Every business is different and may require a mix of different types of plans, so initially, it’s key to analyse your needs systematically to figure out what the best option is for you. Here are the main considerations:
Budget
While it’s important to get as much coverage as possible, you’re also going to need to factor in your budget. Most businesses, especially if they’re just starting out, simply don’t have to funds to opt for the most expensive plans. In these instances, it’s all about prioritisation: if you could only have one plan, which would be the most important?
Assessing Risk
The budget requirements above require that you adequately assess the risks you face on a daily basis. Once again, look to identify which risks are a priority for covering with insurance. Some risks may exist that are only very small, for example, in which case, taking out an expensive insurance plan to cover yourself there may be considered overkill. It’s also important to make sure you have advice when making these sorts of decisions – insurance companies that offer multiple plans will be able to steer you in the right direction (and be sure to consult multiple companies if you have the time).
On Customizable Policies
As previously stated, many businesses require the cover of several different types of insurance policies at once, and there can be a lot of nuance regarding what combinations you may require. Many insurers can provide a tailored package that suits you specifically; they can offer certain deals and adjustments to make their array of policies more appealing and better value, so make sure you investigate this further – don’t just go for the standard option if you have a complicated case!
Work with Reputable Providers
Before you decide to go with a given provider, make sure to do your research on them. Dig into their reputation and read reviews from other businesses to get a good idea of their quality of customer service and claim response times. If the need for an insurance claim arises, you want to be sure that the process goes as smoothly as possible, and the reputation of the company you decide to go with makes all the difference.
Insurance Myths and Misconceptions
To round off with, it’s important to discuss some of the myths, pitfalls, and misconceptions people encounter surrounding insurance.
One of the main myths is that business insurance is only required for large companies, but the reality is that a claim can be far more damaging for a small business: big businesses can often take the financial loss from a lost claim and recover from it, where for a small business, a liability claim, for example, can be devastating.
There’s also a pervasive thought that insurance isn’t that helpful because the programs are too broad, but in today’s day and age, insurers are far more flexible with the type of cover they offer and are far more specific. There’s something for any budget and any usecase, so don’t be put off!
Finally, there’s the pitfall of purchasing the wrong plan – an incredibly common occurrence. If there was a single most important element of this article, it would be to make sure to read the small print. Buying the wrong insurance, thinking you’re covered, and then ultimately not being, is worse than not having any insurance in the first place.
Wrapping Up
Setting up a robust insurance plan for the first time can be a bit bewildering, but as is the case with many aspects of running a business, taking a measured, systematic approach, whereby you take things one step at a time, is the most sure-fire way to get through it. Make the effort to get things right now, and you’ll save yourself any headaches in the future.
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