A solid financial plan for small businesses is vital, and part of that financial plan should be insurance. Insurance is essential to preserve small businesses, cover their assets, and safeguard their employees. Here are some types of insurance coverage a small business should have and why this is critical to your financial plan.
An important part of small business insurance coverage is general liability. This policy covers businesses for some property damage claims and bodily injury claims. Without a general liability policy, your business may not have adequate insurance coverage. General liability insurance helps for injuries to someone other than an employee at your place of business.1
Your business equipment and the physical location of your business might be your most significant assets. Having insurance to repair or replace a building and equipment in the event of damage, fire, theft, or another catastrophe helps avoid an expensive loss.2
Having automobile insurance is critical if your business has any company vehicles, such as delivery trucks. While it is up to you whether or not you want to have your company’s vehicles covered by collision insurance, liability coverage is a must. Without liability insurance on your company’s vehicles, your business may be sued for damages by a third party in the event of a collision.1
Another valuable piece of insurance to include in your financial plan is business interruption insurance. This policy replaces some lost income if your business temporarily shuts down due to certain causes. Interruptions may result from fire, theft, or other significant damage. The policy’s terms and conditions may reimburse you for money lost because of damages and downtime, such as lost revenue or relocation expenses.1
If you have employees, you must, by law, have workers’ compensation insurance to help cover their medical and other expenses for on-the-job injuries. Workers’ compensation insurance covers medical costs and may cover part of their lost wages due to the injury. For fatalities caused by accidents that happen on the job, the coverage pays a death benefit to the survivors of the deceased.2
Small-business owners wear a lot of hats, which makes them invaluable and hard to replace. Having a life insurance policy for the owners of a small business provides the business with some funds to continue in the event of an owner’s untimely passing.1
Small Businesses Are Vulnerable Without Insurance
One of the biggest reasons to include insurance in your small business financial plan is that your company is vulnerable without it. Major property damage or a lawsuit might bankrupt small businesses if they are not adequately insured. However, with enough insurance coverage, you may keep your business moving forward even when an unexpected catastrophe occurs.