Running a business means taking on certain risks. There is definitely a risk of financial loss when you invest everything you have into an endeavor, for example. However, you face many risks every day that you operate your business. They can be physical, financial, or legal. Therefore, you need to ensure that you have the right insurance coverage to protect you against all of them.
The truth is, not all businesses are the same. While every company has some financial risk, no matter its sector, many differences present many unique risks. This can be true even for similar businesses. Depending on where they are located or who they employ, each company could have different types of risks that they face.
This is why specialized insurance is so important. You want to ensure that your business is adequately protected, but standard policies cannot protect against everything. Therefore, you need to add on certain protections and buy separate policies altogether to get the coverage you need. Here are some examples of specialized insurance to give you an idea of whether you need it.
Cyber Coverage
There has never been a time in human history when we have done so much online. We can bank online, buy things online, store data online, and communicate in a flash online. With so much information flying around cyberspace, it’s no wonder that the number of cyberattacks continues to grow every year. One of the most significant risks businesses face regarding cyberattacks is customer data. If there is a breach, then criminals and hackers can take your clients’ personal and confidential information for their own gain.
If this happens, you may be sued by your clients. You will need to defend yourself, and you may even be found negligent and liable. This can have massive financial repercussions since you will be paying for lawyers and the subsequent damages if the final ruling doesn’t go in your favor. Cyber coverage will help with these costs. You can get compensation for your legal fees, plus help with any damages you are ordered to pay. On top of that, cyber insurance can also compensate you for investments made into public relations to work on maintaining or improving the reputation of your business.
Important Employee Insurance
Small businesses tend to work with as few employees as possible. This means that there is little overlap in skills and less of an ability to replace team members internally if they are sick or leave the company. However, if you run a small business, you may have someone on your team that is indispensable. For example, they might have a unique skill, or they are the primary contact with specific essential customers and suppliers.
You can get insurance to help protect your business against losing such a key person due to death or disability. Losing an important employee can result in a loss of revenue and even a loss of clients, depending on their work. They may very well be your most important asset. As such, you can get compensation through key person insurance to help mitigate the financial loss until you can find a replacement. Not every business will need such coverage, and it is less likely to apply to large companies where there is more possibility of overlap in skills and job requirements.
Professional Liability Insurance
Professional liability insurance is for businesses that provide services instead of products. For example, suppose you give advice, provide consulting services, repair work, or anything that can’t be held in your hand. In that case, there is a good chance that you should have professional liability coverage, which is also known as errors and omissions (E&O) insurance.
There may come a time when your business makes a mistake when providing your services, leading to a loss for your client. A good example is a financial advisor who miscalculates and provides poor advice. Or a contractor that misses a deadline, requiring a hotel to reschedule or cancel a big event that would have brought in a lot of revenue. A client has suffered a financial loss in these situations, and the service provider is at fault. E&O insurance helps protect a service-based business from legal costs and damages and makes sure that the client is compensated. However, depending on how much the losses are, paying back out of your own pocket could prove to be disastrous.
Valuable Document Insurance
If your business handles a lot of essential documents, such as contracts and invoices, you may want to have important document insurance. This provides coverage if those documents are damaged and destroyed by fire, water damage, theft, vandalism, and other risks. In addition, this coverage will provide compensation to create the documents again, which can be very costly, depending on the type of paperwork involved. This coverage can also apply to important books and written or typed documents. It should be noted that cash is not considered a document and is not covered by this insurance.
Insurance for Home-Based Businesses
There are approximately 15 million home-based businesses in the United States, and with the advances in technology, you can bet that number will only continue to rise. Many entrepreneurs who work from home think that their personal homeowners’ policy covers them. However, they could be dangerously wrong, which would leave them in trouble if something bad happened.
If you have a home-based business, you need to get insurance specifically to cover you. For example, if a natural disaster hits your home, your work equipment and inventory will not be covered by your existing policy. They represent more significant risks and greater costs, which means that commercial insurance would be more appropriate. Do not assume that you are covered, only to find out too late. If you operate out of your home, make sure that you get the right home-based business insurance to protect you.
Insurance is not one-size-fits-all. Instead, you need to make sure that the specific risks that your business faces are covered. That way, you can sleep easy at night, knowing that your business will be able to weather anything that might come your way.
