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<p class="has-black-color has-text-color has-large-font-size">Small businesses need adequate protection against property damage and liability</p>
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<p class="has-black-color has-text-color has-large-font-size" id="mntl-sc-block_1-0">Even when cash is scarce, or revenues are down, small businesses shouldn’t neglect their insurance needs. Businesses that are underinsured or without broad, proper, and adequate coverage are taking needless risks that could lead to serious financial problems or even bankruptcy. In a crisis, a business that has no insurance or is underinsured can be destroyed.</p>
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<h3 class="has-black-color has-text-color has-large-font-size" id="mntl-sc-block-callout-heading_1-0"><strong>KEY TAKEAWAYS</strong></h3>
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<ul class="has-black-color has-text-color has-large-font-size"><li>Small business owners need to have broad, adequate insurance and should periodically review and update their coverage as their circumstances change.</li><li>Policies available to small businesses include business owner's policy, product liability, professional malpractice, and commercial insurance.</li><li>A homeowners policy can be an important complement to a business owner's policy, but it usually doesn’t cover claims related to a business conducted in the residence.</li><li>Minimum insurance requirements for a business are often imposed by the state where it is located.</li></ul>
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<h2 class="has-black-color has-text-color has-extra-large-font-size" id="mntl-sc-block_1-0-4">Insurance Basics</h2>
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<p class="has-black-color has-text-color has-large-font-size" id="mntl-sc-block_1-0-5">Insurance policies are contractual agreements between the insurer and the insured. The contract will detail such information as:</p>
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<ul id="mntl-sc-block_1-0-7" class="has-black-color has-text-color has-large-font-size"><li>What is insured</li><li>The cost of the insurance</li><li>The conditions under which a claim may be made</li><li>The terms of payment if the claim is honored</li></ul>
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<p class="has-black-color has-text-color has-large-font-size" id="mntl-sc-block_1-0-9">Most insurance policies have deductibles—the amount of money that the insured must pay toward a claim before the insurance company pays anything. Usually, the higher the deductible, the lower the premium—or cost of the insurance. Premiums may be paid on a variety of schedules, including annually (the most common), quarterly, or monthly.</p>
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<p class="has-black-color has-text-color has-large-font-size" id="mntl-sc-block_1-0-11">Policies will also indicate the period of time that they will be in force. In most cases, the insurance company, agent, or broker from whom the business owner bought the insurance will alert them when it needs to be renewed. But, just in case, it’s worth noting the date on a calendar and renewing by the deadline, so there is no gap in coverage.</p>
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<h2 class="has-black-color has-text-color has-extra-large-font-size" id="mntl-sc-block_1-0-13">Types of Business Insurance Coverage</h2>
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<p class="has-black-color has-text-color has-large-font-size" id="mntl-sc-block_1-0-14">There are a number of types of insurance that business owners may want to consider. The appropriate choices will depend on the kind of business, its size, and its particular risks.</p>
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<h3 class="has-black-color has-text-color has-extra-large-font-size" id="mntl-sc-block_1-0-16">Business Owner's Insurance</h3>
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<p class="has-black-color has-text-color has-large-font-size" id="mntl-sc-block_1-0-17">A business owner insurance policy offers small and midsize companies broad protection against financial loss. If their property is damaged by fire or flooding, for example, then the insurance company may pay the cost of repairs. It also might cover the owner’s legal liability for bodily injury to someone if the business is held accountable.</p>
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<p class="has-black-color has-text-color has-large-font-size" id="mntl-sc-block_1-0-19">Exactly what business owner insurance covers will be specified in the policy. An all-risk policy, which covers every eventuality except for specifically cited exclusions, offers more protection than a named perils policy, which only covers the risks that it names.</p>
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<p class="has-black-color has-text-color has-large-font-size" id="mntl-sc-block_1-0-21">Among the risks that may be covered in a business owner’s policy are:</p>
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<ul id="mntl-sc-block_1-0-23" class="has-black-color has-text-color has-large-font-size"><li>Fire</li><li>Flooding (for instance, when a pipe bursts; for natural disasters, you’ll need to get flood insurance)</li><li>Other sources of property damage</li><li>Theft</li><li>Bodily injury</li><li>Business interruption for specified reasons</li></ul>
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<h3 class="has-black-color has-text-color has-extra-large-font-size" id="mntl-sc-block_1-0-25">Product Liability Insurance</h3>
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<p class="has-black-color has-text-color has-large-font-size" id="mntl-sc-block_1-0-26">This type of insurance, obtained at additional cost, may be a necessity if you sell a product that has the potential to injure a user. If you sell a product that injures someone—even if you did not design, manufacture, or distribute the product—then you may have legal liability that should be covered.</p>
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<h3 class="has-black-color has-text-color has-extra-large-font-size" id="mntl-sc-block_1-0-28">Commercial Insurance</h3>
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<p class="has-black-color has-text-color has-large-font-size" id="mntl-sc-block_1-0-29">A commercial insurance policy may be required if your business is larger and more complex than a simple single-owner or partnership retail operation, or is a service-oriented business or professional practice. (A professional practice may also require malpractice insurance, which is covered below.)</p>
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<p class="has-black-color has-text-color has-large-font-size" id="mntl-sc-block_1-0-31">Businesses that may require a commercial insurance policy include manufacturers, restaurants, and commercial real estate operators. A commercial policy is typically more expensive than a business owner's policy because the risks are correspondingly higher and potentially more costly to the insurance company.</p>
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<h3 class="has-black-color has-text-color has-extra-large-font-size" id="mntl-sc-block_1-0-33">Professional Malpractice Insurance</h3>
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<p class="has-black-color has-text-color has-large-font-size" id="mntl-sc-block_1-0-34">Professions (including those listed below) that give advice and/or provide services may require professional malpractice insurance to protect themselves from substantial liability in the event of a lawsuit.</p>
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<ul id="mntl-sc-block_1-0-36" class="has-black-color has-text-color has-large-font-size"><li>Medicine</li><li>Dentistry</li><li>Law</li><li>Accounting</li><li>Advertising</li><li>Financial planning</li><li>Occupational therapy</li><li>Computer analysis</li><li>Journalism</li><li>Psychotherapy</li><li>Real estate</li></ul>
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<p class="has-black-color has-text-color has-large-font-size" id="mntl-sc-block_1-0-38">Insurers calculate premiums for malpractice insurance based on actuarial data for risk, dollar damages, and other relevant factors. Prices vary widely depending on the profession, its subspecialties, and the specific services or advice offered.</p>
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<p class="has-black-color has-text-color has-large-font-size" id="mntl-sc-block_1-0-40">Neurosurgery, for example, is a profession that carries a high premium for malpractice insurance, while a single-owner, private-practice accountancy normally would pay a smaller premium.</p>
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<h3 class="has-black-color has-text-color has-extra-large-font-size" id="mntl-sc-block_1-0-42">Homeowners Insurance</h3>
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<p class="has-black-color has-text-color has-large-font-size" id="mntl-sc-block_1-0-43">Home-based businesses that are run from a private residence need to have a comprehensive homeowners policy as a complement to business owner's insurance.</p>
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<p class="has-black-color has-text-color has-large-font-size" id="mntl-sc-block_1-0-45">Coverage typically includes:</p>
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<ul id="mntl-sc-block_1-0-47" class="has-black-color has-text-color has-large-font-size"><li>Home or personal property damage caused by fire or storms</li><li>Medical costs of occupants’ injuries caused by fire, storms, wind, and lightning</li><li>Medical and legal expenses of other people accidentally injured in the insured home</li><li>Loss or theft of specified personal property, either in or away from the insured home</li></ul>
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<p class="has-black-color has-text-color has-large-font-size" id="mntl-sc-block_1-0-49">However, a homeowners policy doesn’t cover claims related to a business conducted in the residence. For example, if a customer or delivery person is injured on the premises, then any claim arising from that injury would not be covered by the homeowners policy.</p>
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<p class="has-black-color has-text-color has-large-font-size"><strong>Important:</strong> Just as it’s a mistake to be uninsured or underinsured, being overinsured can be a costly waste of money for a business.</p>
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<p class="has-black-color has-text-color has-large-font-size" id="mntl-sc-block_1-0-53">Under certain circumstances, if you have a home-operated business in which risks are minimal, then you can ask to have a low-cost rider or endorsement added to your homeowners policy to cover damage to your business assets; however, some insurers will not let you cover your business if your customers, employees, or vendors visit your home.</p>
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<p class="has-black-color has-text-color has-large-font-size" id="mntl-sc-block_1-0-55">Coverage also may not apply to costly equipment or inventory used or stored on the premises, or if hazardous or combustible materials are used or stored there.</p>
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<h2 class="has-black-color has-text-color has-extra-large-font-size" id="mntl-sc-block_1-0-57">The Dollar Amount of Coverage</h2>
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<p class="has-black-color has-text-color has-large-font-size" id="mntl-sc-block_1-0-58">The dollar amount of coverage for property damage or loss should be consistent with the replacement cost of the properties involved—including your home, if applicable. Liability coverage is more difficult to calculate, so it’s useful to consult with a knowledgeable agent or broker, especially one who is familiar with your type of business.</p>
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<p class="has-black-color has-text-color has-large-font-size" id="mntl-sc-block_1-0-60">Some states also impose minimum insurance requirements for businesses. Your agent, broker, or state insurance department can provide the details.</p>
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<h2 class="has-black-color has-text-color has-extra-large-font-size">What Are Common Types of Business Insurance?</h2>
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<p class="has-black-color has-text-color has-large-font-size">Common types of business insurance include general liability insurance, which covers areas such as bodily harm, property damage, and personal injury; commercial property insurance, which covers your owned or rented business property and equipment; business income insurance, which covers lost income so that you can pay bills and other operating expenses; professional liability insurance, which covers lawsuits against your business; workers' compensation insurance, which covers benefits paid to your employees if they are injured on the job, and data insurance, which covers losses from data breaches.</p>
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<h2 class="has-black-color has-text-color has-extra-large-font-size">How Do You Get Insurance for a Small Business?</h2>
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<p class="has-black-color has-text-color has-large-font-size">The first step in getting business insurance for a small business is determining what type of insurance you need for your business by assessing your risks. Common types of business insurance include general liability insurance, professional liability insurance, disaster insurance, and commercial property insurance. After deciding what insurance you need, search for insurance agents that can assist you in finding the right insurance at a good price. Don't decide on the first insurance policy you see, take your time and look at what is available in the market. Once you settle on one, don't necessarily stick with it. Whenever your insurance expires, reassess your insurance needs and what is available in the market.</p>
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<h2 class="has-black-color has-text-color has-extra-large-font-size">What Is Directors and Officers (D&amp;O) Liability Insurance?</h2>
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<p class="has-black-color has-text-color has-large-font-size">Directors and officers (D&amp;O) liability insurance is insurance that protects the directors and officers of a firm in the event they are sued. Directors and officers may be sued by outside parties, such as suppliers and customers, or by their employees. D&amp;O insurance is meant to protect the personal assets of the directors and officers if they are sued.</p>
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<h2 class="has-black-color has-text-color has-extra-large-font-size" id="mntl-sc-block_1-0-68">The Bottom Line</h2>
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<p class="has-black-color has-text-color has-large-font-size" id="mntl-sc-block_1-0-69">If you run a business, then you should discuss your insurance needs in detail with a knowledgeable insurance agent or broker, and be completely candid in describing the business, so that whatever coverage you buy will be adequate.</p>
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<p class="has-black-color has-text-color has-large-font-size" id="mntl-sc-block_1-0-71">Make sure you know what’s covered and what isn’t—and review your coverage periodically as your business evolves. Once you know exactly what kind of policy or policies you need, you can compare prices from different insurance companies and look for the best value.</p>
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<p>To read the full article, <a href="https://www.investopedia.com/articles/pf/08/business-insurance-coverage.asp">click here.</a></p>
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