Managing risk is a crucial task for every small business owner, and one of the simplest and most effective methods to achieve this is by choosing insurance. Opting for the appropriate insurance coverage provides valuable protection that enables your venture to establish a strong foundation and thrive as a successful business.
Including the right small business insurance in your overall business plan is an essential aspect, but it can be overwhelming, particularly for those who have no prior experience in purchasing coverage. Rider Insurance is a professional insurance agency that provides business insurance services in Maryland.
Following are some tips that you should consider before investing in business insurance:
Know the type of business insurance
The insurance requirements for your business may differ depending on various factors such as your industry, specialization, and the assets associated with your business. Below, we outline the key business insurance policies that you should take into account, along with their respective coverage details: General Liability Insurance, Commercial Property Insurance, Business Owner’s Policy, Professional Liability Insurance, Cyber Liability Insurance, Workers’ Compensation Insurance and more.
Consider what insurance may be legally required
Purchasing business insurance may not only be a wise investment for your small business but also a mandatory requirement. Depending on factors such as your industry, location, clients, and lenders, you might be obligated to have specific coverage in place.
For instance, if you rent a commercial space, your landlord may stipulate that you obtain a general liability policy to protect against potential third-party lawsuits involving bodily injury or property damage. Similarly, mortgage lenders often impose similar insurance requirements for owners of business properties.
In most cases, businesses with employees are legally obligated to carry workers’ compensation insurance. While the specific regulations may vary by state, it is typically mandatory to obtain coverage once you hire your first employee.
Understand your Industry’s risks
Each industry possesses unique characteristics and exposes your business to distinct risks. For instance, an accountant may face the possibility of being sued for errors made while filing a customer’s tax return, while a restaurant owner may be more concerned about the potential for a customer to fall ill after consuming a meal at their establishment.
To address these specific risks, professionals such as accountants can rely on professional liability insurance, which offers protection against lawsuits stemming from errors made in their professional capacity. Similarly, product liability insurance can cover a restaurant’s legal expenses in cases where customers experience illness or allergic reactions due to the food they were served.
By conducting a thorough assessment of the risks prevalent in your industry, you can make informed decisions when purchasing business insurance to safeguard against these risks.
Prioritize coverage over business insurance cost
Once business owners have determined the necessary policies they require, their subsequent concern typically revolves around the cost of business insurance. When operating on a tight budget, every penny becomes significant. However, it is essential to recognize that although business insurance entails additional expenses, it plays a vital role in safeguarding your business from substantial financial harm.
