Small Business and Insurance: What Do You Really Need?Submitted by Business Owner Succession Strategies | Edina, Minnesota on September 14th, 2021
Insuring your business against various forms of financial loss is a common small business strategy. While you have much to attend to with the day-to-day needs of your small business, insurance considerations are equally as important. However, it can be challenging as an entrepreneur to know which types of insurance exist and whether they should become part of the financial considerations for your business. We offer an outline of common types of business insurance below to help with your business planning needs.
General Liability Insurance to Help Protect the Business Owner and Property
This broad coverage helps protect you as a small business owner from financial loss caused by accidents, injuries, and negligence. Two common examples are a customer hurting himself or herself on your business property or accusing your company of false advertising. General liability is one of the most basic and widely purchased type of employer insurance. However, you may wish to consider errors and omissions insurance if you face a higher than usual risk of someone suing your company.1
Commercial Property Insurance
Taking out separate commercial property insurance can provide you with confidence as a small business owner against fire, theft, vandalism, severe weather, and other incidents out of your control that could cause severe damage to your property.1 Business interruption insurance can provide a payout if you’re unable to continue working in your business while your building undergoes repairs.2
Data Breach Insurance
It only takes one unauthorized break-in to your company computer systems to exposes sensitive customer and employee data. To help protect customer and employee needs for privacy, consider data breach insurance if your company routinely deals with sensitive data such as home addresses, social security numbers, income, banking information, and more.
Product Liability Insurance
Not all businesses offer advice on investing and retirement plan or offer personal services. Some strictly manufacture and sell products that could potentially injure a person if the product contains a defect. You would only need to consider this type of business insurance if your company creates or sells products.1
Professional Liability Insurance
Professional liability insurance can be appropriate for businesses and entrepreneurs offering high-level services such as retirement tips, tax planning, legal advice, personal grooming services, real estate agents, and construction work.1 This type of insurance policy can provide your company with additional
financial protection in case a customer or another party sues you. Typically, general liability insurance doesn’t provide coverage for such instances.2
How to Choose the Best Insurance for Your Organization
Several people can help guide you to make appropriate financial preservation decisions. For example, you can ask other professionals in your peer network the types of insurance they purchase and whether they have any recommendations for you. Sitting down with both a lawyer and an accountant can be helpful because each can give you initial recommendations on how to appropriately financially preserve your business as well as provide ongoing guidance.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial professional prior to investing. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly.
The information provided is not intended to be a substitute for specific individualized tax planning or legal advice. We suggest that you consult with a qualified tax or legal advisor.
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