Which Insurance Policies Does My Small Business Need?
You can't look in a crystal ball and predict the problems your business will encounter. But you can think about the complications that might arise when you work with customers, have employees, own commercial property, or drive vehicles.
Let's take a look at each risk category for more details.
(Want to know right now which insurance policies will benefit your business? Our Policy Buddy can show you in two minutes.)
Insurance Policies that Cover Client & Customer Risk
Your business wouldn’t be much without customers coming through the door. Unfortunately, interacting with clients brings the risk of lawsuits, which are not cheap. The Court Statistics Project reports that the median cost of a business liability lawsuit is about $54,000. (For context, our business liability insurance quotes typically range from $425 - $1,200.)
The good news is that there are several company insurance policies to help manage the risks presented by clients and members of the public. Consider these scenarios:
- A customer has a slip-and-fall accident on your property: Commercial General Liability Insurance can help pay for immediate medical expenses and lawsuit costs if you're sued over a non-employee's bodily injury or property damage.
- Your client loses money after taking your professional advice: Professional Liability Insurance (aka Errors & Omissions Insurance) generally pays for your defense if a client alleges you made mistakes in your work.
- An employee loses their laptop, exposing your clients' financial information: Cyber Liability Insurance helps cover the cost of notification, credit monitoring, and other post-breach expenses.
- An overserved patron hurts someone at your bar: In all 50 states, a business can be held liable for alcohol-related damage that happens on its premises, including fighting injuries and damage to patrons' property. In 42 states, a business can be liable for damage caused by drunk patrons after they leave. Liquor Liability Insurance can help manage those risks.
Sometimes it can be tricky to tell where one policy's coverage ends and another's begins. Take a look at our article "General Liability Insurance vs. Professional Liability Insurance" for more clarification.
Bonus tip: If you have a lot of cash in the bank, your business may have a better chance of surviving lawsuits. If not, you might want to supplement your protection with Umbrella Insurance. Getting Umbrella quotes is as easy as checking the Umbrella box when you apply.
Insurance Policies that Cover Employee Risks
Employees help your business run, but more people almost always means more risk. For example, when you have employees, you can be liable for their workplace injuries and violating their work rights. And that's not cheap. Nolo.com estimates that a workplace rights case costs $8,000 to $30,000 in legal fees.
Let's look at some situations where business insurance can help:
- Your employee is hurt on the job. Some industries are inherently "safer" than others, but even office workers can get carpal tunnel syndrome. Most states require employers to carry Workers’ Compensation Insurance, which covers employees' occupational injury expenses.
- An employee sues your business over workplace discrimination. Employment Practices Liability Insurance can cover disputes stemming from the employer-employee relationship.
Bonus tip: Nonprofit organizations and others with a board of directors may want Directors and Officers Insurance. D&O Insurance addresses disputes over decisions the board makes on behalf of the organization. Board members are not technically employees, but this policy may help attract quality talent to board positions.