Small Business Insurance Explained
In this blog, we’re going to talk about what most small businesses need when it comes to business insurance in 2021.
First, for most small businesses whether you’re in retail, professional office, manufacturing, wholesale distribution, garage risks, and even contracting, your core policy is going to be a business owner’s policy commonly referred to as a BOP.
The BOP policy combines y our general liability, and commercial property insurance into one policy and then adds other necessary coverages to it, like some crime coverage, business interruption coverage, and so forth. The BOP is the most economical way to get your property and liability insurance covered.
Next on the list of must-haves is worker’s compensation – if you have employees. If you’re a sole-proprietor one person type operation you can opt-out of workers comp in most cases, but if you have employees, workers comp is going to be required by law in most states.
Third, if you have vehicles used in the business, you’ll need a business auto policy to cover you for auto liability and physical damage to your vehicles. Don’t own vehicles or use them in your business, then make sure you at least have something called hired and non-owned auto liability insurance.
This will protect your company from claims that may involve your company’s use of autos that are rented, borrowed, or hired. I made another video on that which you can view here.
Fourth is commercial umbrella insurance. If you purchase your BOP and Business Auto insurance from the same insurer, chances are good you can also purchase an umbrella from the same insurer for cheap. An umbrella provides excess liability insurance over and above the primary limits the BOP and auto policy provides. Umbrellas usually start at $1M and go up in increments of $1m and as I mentioned are probably the cheapest protection you can purchase. Here’s a hint – when you’re quoting out your policy – don’t just look at a $1m umbrella limit – ask for options like $3M, $5M, or more. It never hurts to look and make a more informed decision.
Next is Cyber Insurance – this may be called cybersecurity coverage, data breach insurance, or something similar. I call it cyber insurance and what it does is protect you from a variety of claims which can arise from hackers gaining access to your data, stealing your data, selling that data on the dark web, locking your systems down until you pay a ransom – called ransomware and more. If you’ve got data stored in a computer, you need cyber insurance. Again, this is cheap insurance for what it protects and the ever-increasing threats that happen every day.
Those are my top 5 MUST HAVE small business insurance policies.
Here are some of my recommended additional coverages:
- Employment Practice Liability Coverage or EPLI – and EPLI policy will protect you and your company from claims which arise from employees (and sometimes outside third parties) who allege acts such as discrimination, harassment, wrongful termination, hostile work environment, and more. While the cost for employment practice isn’t necessarily cheap, it’s something I strongly recommend if you have employees.
If you provide professional services to others – any type of consulting work, technology consulting, or other professional services such as accountants or attorneys, and even hair salons you need to consider Professional Liability insurance, which is also known as E&O or Errors and Omissions insurance. E&O protects you and your firm from allegations of wrongful advice or services which lead to damages.
- Lastly, D&O insurance. For small firms which are funded by outside investors, D&O, or directors and officers liability insurance are a must have as well to protect the decision-makers of the firm from claims which can allege wrongful acts in the administration and managing of the company’s affairs.
How do you go about buying business insurance? Is buying directly cheaper? Is buying from an agent or broker better? I address these options in this video and I hope this is helpful.
Have other questions, concerns, or want to talk to an expert? Give me a call, or drop me an email or click the link below to book a call on my calendar, I love helping business owners with their insurance issues, and I look forward to helping you too. To get started, click the button below. Thanks!