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Insuring Your Small Business

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December 23 2020 • by Marissa Scott • Business


If you own a small business or are planning to create one, there are some important things you'll need to factor into your budget. One of those is small business insurance. Most businesses need some type of insurance, however, some may need more than others depending on the unique risks associated with you, your customers or your employees.

General Liability

The most common type of insurance to consider for your business is general liability insurance. Also known as business liability insurance or commercial liability insurance, this type of insurance protects your business in the event that the business is sued. Many types of claims are covered under general liability insurance such as a client or visitor getting injured at your business, your business causing damage to someone else’s property, or your business being sued for copyright infringement or slander. It’s important to note that there are many things that general liability insurance doesn’t cover

These include:

•    Damage to your business or to your own personal and commercial property 
•    Injuries to, or death of, your own employees
•    Property damage or injuries that you intentionally cause
•    Professional services that you provide to clients

In many cases, small businesses are not required by law to have general liability insurance (requirements vary by state, and by the type of business), but your business could face significant legal bills if it’s not properly insured. 

Workers Compensation 

Workers compensation insurance is a type of insurance that covers expenses incurred by on-the-job injuries. Commonly referred to as “workers comp”, this insurance can cover your employee’s medical expenses or missed wages if they’re injured in a work-related incident. It can also assist an employee with rehabilitation costs if needed and, in extreme cases, costs associated with a work-related death. The majority of workers comp cases in the U.S. are “sprains and strains” due to heavy lifting.

Where your business is located can have an effect on the type of insurance you must purchase. In Massachusetts and Rhode Island for example, all employers are required to carry workers compensation insurance for their employees, no matter how many employees they have.

Cyber Liability 

Businesses that collect sensitive information may also want consider cyber liability insurance. This type of insurance protects your business from financial losses caused by a data breach, such as the cost of informing impacted customers. Some cyber liability policies also cover claims against your business from people or companies that were injured or harmed as a result of the breach.

Professional Liability 

Professional liability insurance is another type of insurance that can protect professionals like doctors, lawyers, realtors, and accountants from malpractice or negligence-related lawsuits. This type of insurance can go by many names, depending on the type of professional who is seeking it. Common types of professional liability insurance include medical malpractice insurance, directors & officers insurance, and errors & omissions insurance. 

Commercial Auto

If you drive for your business, or have employees who do, you'll want to consider commercial auto insurance. This works like personal auto insurance and covers physical injury or auto damage caused by an accident. Larger vehicles such as box trucks and service utility trucks are required to have commercial auto insurance.  

There are many options when it comes to insuring your small business. The exact type of coverage that’s right for you will depend on things like how your business is structured, what type of business you conduct, where your business is located, and the kind of growth you expect for your business over time. With some careful planning, you can easily get the right kind of coverage for your small business and have peace of mind for the future. 

For more resources while running or planning for a small business, visit BankFive’s Small Business Resources