Types of Insurance Small Businesses Need

Starting a business is risky. As a small business owner, you must plan for changes in the economy, customer base and industry. You’ll also need to protect your business. While insurance can't eliminate every risk you face, it can safeguard against many common perils.

What types of insurance do you need to run a small business? Here are some to consider.

• General Liability
  Who needs it: All businesses.
  
  General liability insurance protects from bodily injury and property damage claims related to business operations. It can also cover medical expenses and legal costs if an accident, such as a customer slipping and falling on a wet floor at your location, leads to a lawsuit.
  
  Even if your business doesn’t have a physical location, this coverage is essential for defending many different types of claims. For example, in the case of a house cleaning business, it would cover an employee who accidentally knocked over a client’s antique vase.
  
  Certain clients, like government agencies, might require proof of general liability insurance before signing a contract. The policy also offers protection if your advertising infringes on another business.
  
  
• Commercial Property
  Who needs it: Businesses with a physical location (even if it's just office space) and/or inventory, computers, furniture and equipment.
  
  Commercial property insurance protects buildings, inventory, equipment, and furniture from loss or damage due to theft, fire, or other covered disasters. Every business owner with a physical location should carry commercial property insurance, even when renting an office or retail space. A landlord’s insurance typically doesn’t cover property damage from fire or other losses.
  
  
• Workers' Compensation
  Who needs it: Businesses with at least one employee (besides the owner).
  
  Workers' compensation insurance covers medical expenses, lost wages, and rehabilitation costs for employees who are injured or become ill at work. Most states require any business with at least one employee (other than the business owner) to purchase workers' compensation coverage. If you're required to carry workers' compensation insurance under state law and fail to obtain it, you may face severe and costly repercussions, including fines, out-of-pocket claims, and even jail time.
  
  
• Professional Liability
  Who needs it: Businesses that provide advice or professional services.
  
  Professional liability insurance is also known as “errors and omissions (E&O) insurance.” It protects businesses from the cost of defending negligence lawsuits when customers claim financial harm due to professional advice or services provided (or failure to provide).
  
  Every business that provides advice or professional services can make a mistake, and a customer can sue even if you've done nothing wrong. That's why some states require certain types of professionals, such as accountants and lawyers, to carry professional liability insurance. However, even if this coverage is not required, it's a good idea to ask your insurance advisor about this coverage if you provide advice or professional services.
  
  
• Product Liability
  Who needs it: Businesses that manufacture or sell physical products.
  
  Product liability insurance protects businesses from claims if a product causes injury or other damage to a third party. For example, it would cover a customer’s rash due to clothing dye used in apparel manufacturing or a fire caused by an electronics malfunction. Product liability insurance covers legal fees, medical costs, and other damages.
  
  
• Commercial Auto
  Who needs it: Businesses that own one or more vehicles — and any business where an owner or an employee uses a personal vehicle extensively for work.
  
  Most business owners have personal auto insurance policies for their vehicles. Commercial vehicle insurance is similar but covers physical damage and liability coverage for vehicles owned or used by businesses. These include company cars, commercial trucks, vans, and utility vehicles.
  
  If your business owns any vehicles – from a single car to a large fleet of trucks – you need commercial auto insurance. Many personal auto insurers will exclude coverage for vehicles used for work.
  
  
• Business Interruption
  Who needs it: Brick-and-mortar businesses that are heavily dependent on their physical location and its assets. Home-based and online businesses may also consider business interruption insurance if an unforeseen event could be a threat.
  
  Business interruption insurance helps pay bills, replace lost income, and cover payroll when an unforeseen event forces a temporary closure or disaster recovery efforts. This might include theft, vandalism, fire, wind, falling objects, hurricane, tornado, or other disasters.
  
  For example, commercial property insurance might cover lost furniture and equipment if a fire destroys your office space. But business interruption insurance would cover lost profits and other expenses while you move or rebuild.
  
  
• Cyber Liability
  Who needs it: Businesses that maintain personally identifying information (PII) about customers on a computer or in the cloud.
  
  These days, many businesses maintain a trove of customer information. Names, addresses, medical histories, bank account information, and credit card numbers are targets for hackers. If a breach occurs your small business could face substantial legal costs, as well as the expense of providing identity protection services to affected customers. Cyber liability, also known as “data breach insurance,” helps cover these costs if your business is affected. If you maintain customer PII on devices or in the cloud, you need cyber liability insurance.
  
  
• Employment Practices Liability
  Who needs it: Businesses that plan to hire at least one employee.
  
  Employment practices liability insurance (EPLI) provides coverage for employee claims of discrimination, wrongful termination, harassment, among other work-related issues. Any business planning to hire at least one employee should consider purchasing coverage.

There are many insurance options, but some are available as part of a bundle. Insurance companies often offer policies that combine several types of protection into a business owners policy (BOP) or commercial package policy.

Insurance costs vary depending on your industry, location, and the specifics of your business. Hopefully, you'll never have to use insurance but if something unexpected happens, you'll be thankful for the coverage.

Our banking professionals can assist with your business financial needs. If you’d like to learn more visit your local branch or call 1-888-SYNOVUS (1-888-796-6887).