Women Business Owners, Do You Need Business Insurance?
June 17th 2021
In a word, yes. You need insurance of some type to keep your company up-and-running long-term. Insurance is a tool to help mitigate some of the risks associated with running a business and having employees, both of which open you up to liability.
“If you have a business and hope to survive, you’ll want to protect against losses like property damage and liability claims against your business, says Fran Majidi of SmartFinancial Insurance. “Otherwise, you may have to pay for losses out of pocket or have no assistance if your business becomes inoperable.”
Majidi points out that states each have their own specific laws and requirements regarding business insurance that you’ll want to check. However, in most states, workers compensation, unemployment, and disability insurance are required of employers.
Workers’ Comp Insurance
“Workers’ compensation will cover the costs associated with job-related injuries and illnesses,” explains Majidi. “When your employees experience work-related injuries, the company will be spared from paying their medical expenses because the insurance will cover, if not all, most of it,” says Nick Schrader, an insurance agent with Texas General Insurance.
Employers are often required to carry unemployment insurance, which helps support workers who lose their jobs “for reasons beyond their control,” Majidi says.
“It doesn’t matter what type of business you own; liability insurance can protect you from any customer accidents in your store. Liability insurance can help provide coverage from bodily injury or property damage,” explains Jim Pendergast, senior vice president of altLINE Sobanco, a business advisory firm.
Commercial Umbrella Insurance
Another type to consider is commercial umbrella insurance, which “is an added insurance that extends coverage. If you live in a place prone to break-ins or property damage, umbrella insurance is worth its weight in gold,” Pendergast says.
If your company has a physical presence that employees and/or customers visit, you’ll want to consider liability insurance and property insurance. “You wouldn’t want to throw away your hard-earning money by not making your establishment, tools, and equipment insured,” says Schrader. “Having property insurance ensures that whatever unfortunate events may happen in your establishment, everything will not be wasted because you can file a claim for it.” Meaning, you can be reimbursed for your losses.
Data Breach Insurance
With the exponential rise in computer hackers stealing business data, or holding it hostage, data breach insurance may be something to consider, especially if a large portion of your intellectual property or assets reside online. Pendergast explains that “any costs you must pay when data is stolen can come from data breach insurance.”
Key Man Insurance
Lyle Deitch, an insurance professional and CEO of Parachute360, says, “I always recommend that small business owners have key man insurance….[it] can be invaluable in buying your business, investors and family the time it needs to sort out the business, so that it can continue operations.”
“Business interruption insurance, or BII, can be bought separately from a BOP policy, but it’ll cost more,” Majidi explains. “BII isn’t just lost income insurance, either. In the event of a covered catastrophe, BII may help pay mortgages and leases, taxes, relocation costs (this is especially important if this determines whether or not a business can get back on track), payroll costs and more.”
Business Owner’s Policy (BOP)
“Most small businesses would do well to purchase a small business owner’s policy (BOP), which combines business property, business liability and business income in one affordable policy,” says Majidi. “With this policy, your business would be covered if there were damages done to the building, equipment, furniture, documents, and all other contents. You’d also be covered if your business operations came to a halt due to a covered catastrophe,” she says.
“Often, the difference between a business that overcomes a disaster and one that shuts down is the right business insurance policy,” says Majidi.
Heather Burns of Hutcheson Reynolds & Caswell Insurance in Ontario, Canada, points out that business insurance can help protect all the assets associated with a business and can help “absorb the financial burden of a loss to their business.”
Big picture, she says, business insurance “is designed to give all business owners peace of mind knowing their investment is protected.”