If you are just getting a business off the ground, have bought equipment/vehicles and started hiring employees, insurance should be top of mind.

There are four types of insurance that most small businesses purchase to protect themselves, and without them one accident or oversight could leave you with liabilities you may not be able to cover. When a company is growing from a sole proprietorship to one with employees, the insurance needs grow quickly.

Here’s a look at the types of insurance most small businesses carry as they start growing.  Please note, of course, that there are typically coverage exclusions that apply in all of these so be aware of what they are.


Property Insurance

This type of coverage provides compensation if business property is damaged, stolen or lost.

In addition to covering the physical business structure, property insurance covers personal property, including:

  • Inventory,
  • Office furnishings,
  • Raw materials,
  • Computers,
  • Machinery, and
  • Other items that are part of business operations.


Property insurance coverage doesn’t end with protecting physical assets. It also provides business interruption funds when owners must take steps to get their business back on track following a major loss and if their operations have been impaired.

Property insurance may provide coverage for broken equipment in some cases if caused by a covered peril, but not if a machine breaks down. It may also provide coverage for water damage, debris removal following a fire and several other specific items.  Inland Marine is a type of Property Coverage that is great for lots of types of mobile equipment and various items/product while being transported/shipped.


Workers’ Compensation

Any company with employees is required to purchase workers’ compensation insurance in most states.

Workers’ compensation pays for a portion of lost wages for workers who are injured. In addition to this, it covers the medical care they require. Coverage is provided to employees who are injured at work regardless of who is at fault.

If a worker dies as a result of the injuries they sustain, the insurance company compensates the surviving family members of the deceased.


Commercial Auto Insurance

This is only necessary if you have vehicles that you use in the course of business, or if you and/or your staff drive their own cars on company business.

Most personal vehicle insurance policies don’t provide coverage if the automobile that is involved in an accident is used mostly for business purposes and most personal policies exclude business use of autos.

Business auto insurance policies cover vehicles that are owned and used by a business. Third parties injured by the policyholder’s vehicle receive compensation for damages up to the policy limit amount.

Some policies may provide compensation for repair or replacement of vehicles that are damaged from flooding, theft, accidents and similar events.


Liability Insurance

Any business may face a lawsuit or claim of damages at some point during its existence. Liability insurance can cushion the blow by covering legal costs, settlements or judgments.

For example, a person may claim that a business caused them harm from a service error, defective product or negligence in providing a safe environment. Liability coverage provides a response  for damages a company is deemed liable for.

However, the coverage is only provided up to the policy’s limit amounts. These policies usually also provide funds for legal defense expenses, attorneys’ fees, medical bills and several other related expenses.


The Takeaway

In addition to the four major types of coverage purchased, there are several other valuable policies some companies may want to buy depending on their business. Umbrella policies and specialized liability policies are among the more common types.

Umbrella policies are often used as a second layer of insurance should you exhaust the limits of an underlying liability policy. These are usually obtained to prevent high losses by businesses with high risks.

Specialized liability policies are made up of several types of individual coverage, such as errors and omissions coverage for companies that provide professional services like architects or programmers.

If you need help with any of these types of coverages, and/or your business needs help with special coverage needs, give us a call.