Running a business means you have created a system in which your products or services can generate revenues, keep your employees working, and make you profitable. But at any time, there may be an accident, mishap, emergency, or conflict that threatens your business’s viability. If you are a business owner or operator, you should have business insurance coverage to protect you from liability related to your business or damages that affect your business systemically.

A business insurance policy may not be legally required in some types of business or professions, but it should be a necessity, regardless of the type of business you operate or how your business is structured. For instance, even with an LLC, there is still potential for personal liability if you acted as a person and not within your business.

If you operate a business as a regular partnership or sole proprietor, you will be personally liable if your business was found at fault in a dispute or conflict. Often, owners of small business entities like these believe that can protect themselves from liability by taking on a larger entity (like a corporation or company). However, instead of having to deal with the tax compliance and other requirements, sound insurance coverage can provide similar protection.

With that in mind, there are different types of business insurance policies that would fit your particular business or profession better than others:

• Business Owner’s Policy (BOP): The BOP is a package of three types of business coverage, including property insurance to cover your business’s location from damages, business interruption insurance that reimburses lost income as a result of damage or catastrophe to the business or its location, and liability protection---covering you, your employees and the business in case of harm to others through a product or services your business performs. These three components can also be purchased separately.

• Professional Liability Insurance: This type of coverage is also known as Errors and Omissions coverage or Malpractice insurance. Doctors, medical professionals, lawyers, and some mental health professionals are required to have professional liability coverage, as their judgment and actions can directly affect clientele.

You can also purchase multiple policies for different aspects of your business system. If you are medical professional, and have an office or clinic, you could get a business owner’s policy for property, income interruption, and employee/business liability, while also having professional liability coverage for your medical activities.

If you are currently operating a small business without business insurance, you can start by inquiring with home, health, or car insurance providers, as they may offer such coverage. It may also benefit you financially, as many insurance companies offer policy reductions for multiple policies by one client.

References

Darrell Zahorsky. Protecting Your Assets with Business Liability Insurance.

Insurance Information Institute. What Does a Businesswoners Policy Cover?

Stuart Brown. How to Sort Out Professional Liability Insurance through Your Life and Health Agent