The traditional workplace model has evolved rapidly over the past few years, with an additional catalyst from Covid. Accordingly, more employees work from home than ever before, and the majority of business transactions increasingly occur online. As a result, small business owners are re-evaluating how they think about insurance, and where they need to prioritize insurance coverage. Though some operations will always be brick and mortar and require coverage for on-premise assets, the question we are often asked centers on what areas of coverage matter most for small businesses in 2022.
Unfortunately, there is no one-size-fits-all answer for how much coverage your small business insurance policy should include, specific requirements ring true across the board. Additionally, some states may require unique types of coverage needed for particular industries, where as others do not. Following are (5) key types of business insurance that small business owners should always consider.
1. Business Liability Insurance
Business liability insurance, also known as general liability insurance, helps protect your business from claims of bodily injury, personal injury, or property damage to others due to your regular business operations. This coverage provides legal defence if a suit is brought against your business. Defense costs out of pocket can be very costly. Protection may also extend to customers against damages through business liability, and can include business assets as well as potentially factoring-in the costs of defending against such claims.
2. Business Owners’ Insurance Policy (BOP)
Business Owners’ Insurance combines various coverage options into one package resulting in more protection than typical business policies. Often, providers use bundling policies to help business owners save through multiple discounts such as: property insurance, commercial general liability, and additional types of coverage based on your business needs. BOPs protect day-to-day operations and, besides business liability, may also include coverage for premises medical, fire legal liability, business income insurance, and coverage for on-site equipment and inventory loss.
3. Workers’ Compensation
Workers’ Compensation Insurance covers areas such as medical costs and partial wage replacement when employees become injured or ill on the job. It is intended to help employees get back to work quickly while minimizing damage to a business’s operations and financial health.
Workers’ comp helps protect employers from potential lawsuits by employees over workplace conditions. When accidents happen, workers comp provides needed protection when a worker suffers an injury on the job. These protections include both the injured party and the business owner. Every state mandates a unique workers’ compensation system to ensure employers pay for the cost of injuries or occupational diseases during their work, and additional considerations like ongoing care, rehabilitation, missed wages, employee lawsuits, funeral expenses, and death benefits for the deceased’s family. Important to note, worker’s compensation does not cover third-party lawsuits, lawsuits over professional errors, wages for a replacement worker, parental leave benefits, or OSHA penalties.
4. Commercial Umbrella Insurance
Commercial Umbrella Insurance Commercial umbrella insurance provides an extra layer of liability protection by covering costs beyond your liability coverage limits. It will safeguard the business’s assets from major lawsuits resulting from such things as on-premise or off-premise accidents; slip and fall accidents; carbon monoxide leaks; libel, slander, and invasion of privacy claims; fire damage; vehicle accidents; and employment practices violations.
5. Cyber Liability Insurance
CNBC reports that 43% of cyberattacks are aimed at small business, but only 14% are prepared to defend themselves according to Accenture. Cyber liability insurance protects against the high costs of a data breach or software attack. It provides coverage for expenses associated with these events in the form of customer notification, credit monitoring, loss of business income, software and website restoration, regulatory fines and other enhancements that vary by contract.
These enhancements often include: cyber-crime, wire transfer fraud, ransom payment, reputational harm and others. In addition to financial support, many insurance carriers provide expert resources to assist in post-breach recovery. These policies exist to help support a business’s efforts to recover from the potentially devastating effects of a data breach.
As 2023 approaches, millions of small businesses now have 100% of their staff working remotely – therefore we’re recommending that SMBs begin to formally re-access their coverage requirements, with specific consideration in these five areas of concentration.
Additionally, we suggest finding a trusted independent insurance advisor to partner with, such as ALINK Insurance Services, that are focused on coverage throughout Colorado, Utah, Arizona, Texas, Nevada, Wyoming and many other stated — they are a great example of an insurance firm that specializes in small business consultancy for over 60 years.