Essential Insurance for Small Businesses

If you own a small business, you’ve invested a lot of time and money in making it a success, but how much time have you taken to secure the right insurance? Even if you carefully selected your coverage when you launched your business, it may no longer cover you after growth – even small operational changes can create new liabilities.

In honor of National Small Business Week, we’re highlighting eight essential insurance policies for small businesses.

Commercial property insurance

Commercial property insurance protects your business’s physical assets from unexpected events, like fires, windstorms, theft and vandalism. It covers your building’s structure and your belongings, like furniture, equipment and inventory. However, it doesn’t cover excluded perils, like floods, earthquakes, equipment breakdowns, employee lawsuits or employee theft. Nor will it cover your business vehicles. You’d need separate coverage for those risks.

Business interruption insurance

If a fire, theft or natural disaster covered by your business insurance were to temporarily shut down your business, would you be able to pay your bills? Think rent, payroll, utilities and other monthly expenses. Business interruption insurance compensates you for lost income if your business is forced to close during a covered event.

General liability insurance

General liability insurance protects your business if a customer or third party sues you for bodily injury, property damage, or personal or advertising injury. For example, say it’s raining and your reception area is wet. A client slips and falls, and decides to sue you for bodily injury. In this case, your general liability insurance would help pay for your legal defense and any resulting settlements or judgments. But if your employee slips and falls, that’s not covered by general liability. You’d need workers’ compensation insurance for that.

Workers’ compensation insurance

If one of your employees gets injured on the job, workers’ compensation insurance will pay for lost wages and medical benefits. It will also protect you from being sued. In most cases, the injured employee relinquishes their right to sue in exchange for benefits. 

Equipment breakdown insurance

If a power surge, electrical short or mechanical failure takes your essential equipment out of commission, you might face substantial losses. Equipment breakdown insurance can help cover the cost of repairing or replacing damaged equipment. It may also compensate you for any resulting inventory spoilage.

Professional liability insurance

Professional liability protects you against claims of negligence, errors and omissions, or mistakes you or your employees make while doing business. It’s not just for lawyers or doctors; anyone who gives advice, makes recommendations or provides a service can be sued. It covers your legal defense, such as attorney and court fees, and financial losses from settlements or judgments.

Commercial auto insurance

Personal auto insurance won’t cover your business operations; you need a commercial or business auto policy for that. Commercial auto insurance protects any vehicles your company owns. It covers different damages and liabilities, depending on the kind of protection you buy. 

Cyber liability insurance

All businesses that collect, store or process consumer data need cyber liability insurance. While you might think this type of policy only applies to large companies, it doesn’t. Hackers target small businesses because they often lack robust cybersecurity. If your business falls victim to a phishing scam or ransomware attack, a cyber liability policy can help with:

• Notifying customers about the breach

• Providing free credit monitoring for affected customers

• Paying state and federal fines

• Mounting a legal defense if you’re sued

• Rebuilding your computers and systems

• Recovering ransom payments

• Replacing lost income due to business interruption (with added business interruption coverage)

• Repairing your damaged reputation

Ready to review the coverage needed against your specific risks? Call Menicucci Insurance Agency at 505.883.3683 or reach out directly to your expert agent.