When it comes to insurance, one size certainly does not fit all. This couldn’t be truer when reviewing the insurance needs of small businesses.
It is often thought the larger an organization, the more insurance coverage required. Relative to smaller organizations, this train of thought may be valid. However, in comparison to a company’s revenue, it is the small business who likely requires proportionately more insurance.
Large companies often have resources most smaller businesses do not. Their ability to implement complicated risk management strategies and hire legal teams to provide defense allow a sizable company to self-insure some of their risks.
Small businesses, on the other hand, could fold under the weight of even a seemingly insignificant claim. More tragically, owners of small businesses often have their life savings at risk every day they turn on their open sign.
Small business owners can better protect themselves by purchasing the right type of insurance coverages at the most appropriate limits. Here are four of the most important insurance policies a small business should consider today:
General Liability – Many businesses are not required to carry a liability insurance policy. However, any time you or an employee interacts with the public, there is a risk of causing physical damage or bodily injury to someone else. A general liability insurance policy providing $1M in coverage will serve as a strong foundational policy.
Cyber Liability – The cost of a data breach can cost an organization thousands of dollars. Companies who maintain even minimal information about their clients and prospects could expose themselves to lawsuits and civil penalties if information is lost or stolen. Additionally, ransomware attacks, wire transfer fraud, and phishing scams are only becoming more rampant. A cyber liability will not only provide insurance protection, but the resources to provide a business the guidance needed if they have an incident.
Automobile Liability – You may not think your business has an automobile liability exposure your company doesn’t own any automobiles. But anytime you or an employee is driving on behalf of your business, you have an exposure. This includes driving to the bank on company business or renting a car for a meeting in a faraway city. Nearly all businesses have some automotive liability exposure that needs to be protected.
Umbrella Liability – There has been a spike in “nuclear” verdicts in recent years where plaintiffs are being awarded massive sums of money due to the negligence of a business. When the limits of your automobile, workers compensation, or general liability policy aren’t enough, an umbrella policy can step in and make up the difference. For most businesses, umbrella policies are very affordable and worth the significant safety net they provide.