Insurance generally protects small businesses from an array of adverse events; for instance, property insurance typically covers businesses against fire, vandalism, theft and smoke damage to business premises, inventory and equipment, explains Forbes. Small-business owners can augment property insurance with a loss of earnings cover or business interruption insurance to protect their income in case untoward occurrences impede normal business operations.
Small businesses that save confidential client and employee data in computers, servers, normal paper files and other information storage devices may need to acquire data breach insurance for protection against loss occasioned by hacking and other forms of fraudulent information access, suggests Forbes. Business owners should also consider purchasing general liability insurance for protection in the event they are accused of causing bodily harm or property damage to third parties through their products, services or employees.
Worker’s compensation provides medical benefits and wage replacement for employees who are injured while working in lieu of their right to sue their employer, explains Forbes. While regulations on this form of insurance vary by jurisdiction, all states require employers with W-2 employees to have worker’s compensation; infractions typically attract severe sanctions.
Rather than go through the trouble of purchasing individual covers for the varied elements of a small outfit, business owners may opt to acquire the business owner’s policy, an omnibus package that contains the typical covers — liability insurance, business interruption insurance, vehicle coverage, worker’s compensation, and so on — that a small business generally needs, explains Forbes. These policies, which can be tweaked to fit the needs of even the most atypical of businesses, come with an additional bonus: They generally cost less than a comparable collection of individual covers.