What You Need to Know About Small Business Insurance

If you are involved in a business, you are probably aware of the issue of insurance. You might have insurance for your home, car, travel, and even life insurance. https://treeservicefredericksburg.com/ and other towing businesses are fully insured. Insurance will help in protecting you from costs and damages that arise from unexpected events. No one wants to incur extra costs from insurance but when damages happen, you come to thank the benefits offered by insurance.

Small business insurance is something that most entrepreneurs don’t think about. Here is what you need to know about small business insurance.

 

Understanding business structure

The first step towards deciding on insurance involves understanding the liability of your business structure. It is important to realize the way your business is structured. At the lowest structure is a sole proprietor and partnerships. With this format, there is no separation between you and your business. If your business gets sued, you are personally liable for everything. If you get sued, your assets become vulnerable

Next, we have a limited liability company. If you have been incorporated or you have a limited liability company, you have already separated your business from your finances. Your business is on its own and is responsible for debts and liabilities. This is what we call a corporate shield and protects the owner’s assets from the business. If your business is expanding, you should set it up as a corporation.

However, you should not always assume that limited liability companies are always free from personal liabilities. There are several circumstances where you can personally be liable. If you guarantee a loan for your business, or if you commit and operate your business illegally or you don’t operate your business as a separate entity, you will be fully liable. Always take your business and personal liability seriously.

Types of small business insurance you need

The specific insurance needs of your business will depend on the type of business and risk tolerance. However, there are some insurance types you need to understand. There is general insurance coverage for small and large businesses. The general liability insurance will be basic protection that covers businesses against accidents, injuries, and negligence claims.

We also have professional liability insurance also known as errors and omission insurance. It protects businesses against negligence claims that arise from failure to perform. It becomes very applicable to businesses that provide services such as consultancy, law, and accounting. The insurance will protect you against claims of negligence and malpractice.

We also have commercial property insurance which mostly applies when a business owns or leases any kind of property such as office, building, or expensive equipment. You will need to have property insurance to cover for any loses or damages that result from events such as smoke, fire, and vandalism. Commercial property insurance will cover for assets such as furniture and other equipment, signage, and lost income when business operations are suspended.

Other insurances include; commercial auto insurance, homeowner’s insurance, data breach insurance, worker’s compensation insurance, among others.

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