10 Types of Small Business Insurance to Consider

Buying small business insurance can feel overwhelming. Here's a look at the different types and why they matter.

Would you feel more comfortable with small business insurance, but find yourself confused about the process? I definitely understand.

However, getting coverage is the best way to protect you, your employees and the business.

Any risk your business faces could be covered under the right plan. You’ll want to shop around and get several business insurance quotes, but before you start doing that you need to know what type of insurance you need.

That’s where today’s post comes in. I’d like to take you through the different types of coverage and how they impact and relate to your business.

Cover Mistakes With Liability Insurance

The word liability is simply defined as:

“The state of being legally responsible for something.” – Merriam Webster

As a business owner, the risk and liability falls on your shoulders. This is especially true if you’re running a sole proprietorship because there’s no separation between you and the company.

There are three main types of liability insurance: general, professional and product. Each protects different things, and it important to know the differences before you buy.

General Liability

video courtesy of Insureon

I like the word general. Sounds like it will cover a smorgasbord of problems.

Personally, being liable for everyone’s safety sounds really terrifying. Luckily, this type of business insurance covers the accidents that could happen on my watch. If a client or employee is injured at my business, this will keep me protected.

Where to Find It:

Product Liability

I don’t sell physical products but some service-based business owners do. Have you ever thought of the legal consequences of selling something with a harmful defect?

You definitely don’t want to be open to that kind of scrutiny. So, you’ll want this coverage.

Where to Find It:

Professional Liability

video courtesy of Insureon

Consider this the products liability for service-based businesses.

It’s a way to protect you from mistakes you make in client services. You’ll get covered for errors, omissions or negligence. For example, if you’re a professional wedding photographer, equipment failure would be a disastrous experience. Should the devastated couple pursue legal action, your liability insurance could cover the incident.

Where to Find It:

Get Business Insurance for People You Care About

You should get small business insurance to cover yourself and the people in your company. Losing an important employee can endanger your livelihood and devastate the business.

The following coverages will guard you, your business and your family from that risk.

Key Person Insurance

As lame as it feels to admit – some people are just more important to our success than others.

I know if one of my key people were suddenly disabled, it would throw a huge wrench into my productivity and profitability. Thankfully, key person insurance offers support by helping with lost sales, replacement costs and increased expenses should something happen.

Where to Find It:

Health Insurance

As someone that runs a small sole proprietorship, I find it pretty difficult to compete with larger companies when it comes to benefits. But something like small business health insurance is a really strong selling point.

If you can afford it, go for it because it’s something that will support employee acquisition and retention.

Where to Find it:

Disability Insurance

A large portion of my income comes from writing, and I often wonder what would happen if I broke my hand. (I’m the kind of person that plays through all the worst-case scenarios.)

Having disability insurance would give some peace of mind by covering your income as you recover from an injury or illness.

Where to Find it:

Life Insurance

If you’re a sole proprietor, you really need to invest in life insurance.

By doing so, you protect your family in the event of your death. Because you’re responsible for all the debts, life insurance makes sure that you family has everything they need.

Where to Find it:

Protect The Things Your Business Owns

Disasters and emergency situations are always a danger. And the scariest part is that you can never plan for it to happen. By the very nature of tragedy, it comes when you least expect it.

Certain types of small business insurance coverage can help in these situations.

With it, you’ll be able to protect your earning and assets when a disaster pummels your office and other business assets. Any business could benefit from these types of coverage. However, it’s most important if you live in an area prone to natural disasters, war or crime.

Property Insurance

Whether it’s a fire or natural disaster, carrying this coverage is a must for small businesses running a brick-and-mortar shop.

Where to Find it:

Vehicle Insurance

If you own company vehicles, they need to be insured.

Commercial auto insurance will protect you from: injuries or death of driver, damage to the company vehicle, and the damage your vehicle causes to others.

Where to Find it:

Business Interruption Insurance

This takes property coverage a step further. With it, you’ll get compensated based on your financial reports for the income loss that happens as a result of disaster.

Property insurance covers the building, whereas business interruption covers your time.

Where to Find it:

Will You Be Getting Small Business Insurance?

Some people worry about how this affects their financials. Using our small business accounting software  can show you how these expenses impact your business so you know where money is being spent and how it truly impacts your overall revenue.

The best thing you can do is shop around and get various business insurance quotes. From there, you can evaluate which will work best for you.

Do you have insurance already? I’d love to hear your experience on how it’s helped (or hurt) your business. Share it with me in the comments below.

about the author

Freelance Contributor Chelsei Henderson is a content marketing consultant helping freelancers and entrepreneurs build successful companies in the digital world.