When it comes to running a business, there’s no such thing as being too small for insurance to be cost-effective. Still, the cost-efficiency of the insurance is incredibly difficult to calculate. First of all, it’s one of those investments you hope you’ll never get the chance to capitalize on. For instance, even with the insurance on your corporate vehicle, while it‘s in repair, you’ll undergo an expensive turnover, possibly even have to resort to using your employees’ private vehicles while reimbursing them for the fuel. On the other hand, not having the insurance can cause so many problems you don’t even want to think about. That said, here are five types of insurance that every small business should have.
Business vehicle insurance
Seeing as how this is the example we used in the introduction, it’s only natural that we start with business vehicle insurance. Some believe that their personal auto policy may be enough to cover business use; however, this is only true in some specific situations. In case of serious injury, a personal insurance policy might not cut it. Before you apply for business vehicle insurance, you also need to know which vehicles are covered by this insurance. Here, you have not only all the cars your business owns, but also all vehicles that your company hires or leases covered. As for privately owned vehicles used for business, most policies tend to cover them, as well.
Product liability insurance
Those who are not in the service, but in the retail industry, need to make sure to get the best product liability insurance they possibly can. The purpose of this insurance is to cover any potential damage caused by your products. The mistake that some companies make is believing that a disclaimer is powerful enough to cover them from the legal standpoint, yet this is not always the case. Injuries caused by the equipment supplied by you, damage caused by software downloaded from your site and any illness caused by the nutrients (food, supplements or vitamins) bought from you are covered by this insurance.
General liability insurance
Another thing you should understand is the fact that your product liability insurance does cover a narrow niche and a limited array of situations. This is why you might want to look more closely at general liability insurance policies like those offered by companies such as Youi NZ. This keeps you covered not only in a scenario where your product causes damage, but even in a situation where the damage is done by your employee. When combined with so-called error and omissions insurance (in a case where you offer professional advice or recommendations), you can create a holistic system which keeps your business out of the harm’s way.
There is a misconception that property insurance is something that’s only needed in areas where hurricanes, floods and earthquakes are a common occurrence. On the other hand, people who believe or even quote this fact tend to forget that in most cases, fires caused by an installation error are still the main cause of commercial property damage. The financial damage caused by such property loss just between years 2009 and 2011 amounted to about $2.6 billion, which is a staggering figure, even though they represent only 6 percent of all reported fires and 3 percent of all fire deaths. The reason behind this lies in the fact that, on average, most company headquarters tend to be better prepared for such eventuality. This, nevertheless, doesn’t mean that it’s something to be avoided.
Workers’ compensation insurance
Finally, you need to keep in mind that your employee retention and fair treatment directly depend on the efficiency of your workers’ compensation policy. Nevertheless, while workers’ compensation insurance is a fairly regular thing even with small businesses, the biggest mistake happens when it comes to the issue of independent contractors. Since this group doesn’t need to be covered by workers’ compensation insurance, a lot of small business owners see a gray area they can exploit. This is what makes them believe that they can dodge this responsibility by simply claiming that an injured employee was an independent contractor.
While there are some other honorable mentions that you should consider getting insurance for, the above-listed five should be the bare minimum even for the smallest of enterprises. Ironically, only when you try to avoid getting these policies do you discover just how common these hazardous occurrences are in the business world.