You’ve made your plans; you’ve put everything in its place; you’ve turned the sign from closed to open. You’re all ready to go–or are you?
As a business owner, your mind is most likely going 100 different directions at any given time, which can make it easy to overlook essential to-do items–like purchasing the right kind of insurance. Whether you are starting a business or purchasing an existing business in Arkansas, one of your very first steps should be finding a knowledgable insurance agent and talking in-depth with them about your business to get all of your coverage needs squared away.
First and foremost, you will need to purchase commercial insurance. After all, it’s one of the most important purchases for your business, whether you work in retail, a professional office, or even as a contractor. Sometimes also known as business owners insurance, good commercial insurance will protect you and your company from possible severe financial loss, and can be the difference between closing your doors and remaining open if something were to happen and you are found responsible for damages or involved in a lawsuit.
What is Commercial Insurance?
What exactly is commercial insurance? It’s your protection in the event you experience a loss from things such as property damage, theft, employee injury, and liability. There are three main types of commercial insurance.
- Commercial Liability protects you from damages incurred by a third party.
- Commercial Property Insurance protects you from damage to your property/business in case of natural disasters.
- Workers Compensation protects you and your employees if they get injured on the job, and protects you from frivolous employee lawsuits.
There are also specialized forms of sub-insurance that will protect you in your specific business area. It’s vital to understand the various types of commercial insurance and what is appropriate for your company to make sure you work with a reputable insurance agent who can create the most appropriate policy for your specific needs.
As long as you have the right protection in place, you can weather any storm you might experience as a business owner and even recover from loss. However, without the proper commercial insurance for your business, you are taking a serious risk of losing everything you’ve worked for, and potentially even going out of business.
What Kind of Businesses Need Commercial Insurance?
As we mentioned, all businesses need commercial insurance, for the sheer fact that the likelihood something is going to happen is high. It’s just a fact—the longer you’re in business and the more clients or employees you have, the more likely something will happen. Isn’t it best to know that if it does happen, whether major or minor, you’re protected? Absolutely.
Without coverage in place, you may be responsible to pay out-of-pocket for costly damages and even legal claims. Needless to say, this could be financially devastating. This is why in some states, businesses are required to have certain types of insurance.
In this article, we’ll highlight three types of businesses: retail, professional offices, and contractors.
Because insurance is not one-size-fits-all, your retail business may be exposed to different types of risk than even the one next door. You’ll want to talk to your insurance agent about your own unique business qualities, such as location, personal property inside and out, how many employees, and other factors that will affect what retail insurance policy you will need. We recommend discussing the following coverages, and whether you’ll need them in your business.
- General Liability Insurance: This truly is essential for your retail business. Perhaps someone slips while walking into your store and incurs even the slightest injury. This kind of insurance policy will protect you.
- Commercial Property Insurance: Depending, of course, on where your business is located, such as city and state, flood plain, tornado alley, etc., a commercial property insurance policy will protect you should damage occur in case of natural disasters.
- Workers Compensation Insurance: Whether you have one or many employees, workers compensation will protect you and your employees if they get injured on the job.
- Commercial Auto Insurance: You may need this coverage if you have a vehicle you use for business purposes–perhaps if you have a delivery van or make deliveries using a car. Commercial Auto Insurance is another essential coverage you will need in the event of accidents or injuries.
- Theft Insurance: Any retail business will be subject to possible theft by customers or employees. This insurance policy will generally cover inventory, but can be extended to cover all other items as well (i.e., computers, cash registers, etc.)
Just like for retail, when you open a professional office and start serving clients, you are automatically subject to certain risks. The following are some coverages you’ll want to talk to your agent about depending on factors such as number of employees, location, personal property, whether you’ll be storing customer information on a computer (thus opening up cyber risks), and other factors. We recommend discussing the following insurance coverages with a licensed insurance agent to determine whether or not you’ll need them in your business.
- Professional Liability Insurance: You may have heard this referred to as Errors and Omissions (E&O). This policy covers you against negligence claims in the event of mistakes or “failure to perform” a promised service. An example of this would be Malpractice Insurance. Since all professions are different, make sure to cover in detail with your agent exactly what services you’ll be performing in your business, so that coverage will be tailored to exactly what you need.
- Home-Based Business Insurance: If you operate your business from your home, your homeowners insurance most likely won’t cover you should something happen, such as damage or theft to computers. Without the right coverage, your business could have to pay out of pocket for property damage, lawsuits, and issues related to data loss.
- Product Liability Insurance: If your professional office produces products for sale on the general market, product liability coverage is essential. Even if you take every precaution and follow all procedures to ensure safety, things can go wrong. Don’t leave yourself open to financial ruin because of improper coverage.
- Business Interruption Insurance: If a natural disaster or catastrophic event occurs, you may not be able to conduct your professional office’s business for days, weeks, or months. Business interruption insurance will protect you and your staff from lost income, and can give you compensatory help that you need.
If ever there was a caveat for no one-size-fits-all insurance, the genre of contractors is it. So much will depend on your field, your clients, whether you’re stationary or traveling, tools, equipment, cars, and more. You will absolutely want to sit down with an agent and go over every single detail of what you do, what you might do, what you’ll do in the future, and everything in-between. Make sure you have the right types and amount of coverage—no more, no less. We recommend discussing the following coverages, and whether you’ll need them in your contracting business.
- Inland Marine Insurance: Inland Marine Insurance is a specialized kind of commercial property insurance policy that covers equipment being moved from site to site. Sounds like the kind of insurance a contractor might need, right? This policy will cover damage to your equipment in transit or off-premise.
- Surety Bond Insurance: This kind of insurance typically helps small contractors compete for contracts by reassuring customers that they will receive the product or service promised. Check with your agent to see if your field of work will require you to have a surety bond to protect your clients’ financial losses in the event you fail to deliver on a contracted work for any reason.
- General Professional Liability: Like professional offices, contractors also need Errors and Omissions (E&O) to cover against mistakes or “failure to perform” a promised service. Make sure you discuss getting this tailored to the specific kind of contract work you do.
- Workers Compensation Insurance: Workers Compensation is a must for contractors, as the likelihood of job-related injuries is higher than most lines of work. Workers compensation will protect your business, yourself, and your employees when an accident occurs that causes injuries to your employees.
- Commercial Auto Insurance: Most contractors have a vehicle they use for business purposes. If that applies to you, you will want to obtain a commercial auto insurance policy to cover financial costs associated with an at-fault accident.
The Bottom Line
Business or commercial insurance is a necessary tool to ensure you and your assets are protected in an unforeseen event.
There are several types of businesses, meaning there is also a wide variety of insurance coverage types available. Your commercial insurance agent will help you tailor your coverage to address your specific needs. Some things to think about and discuss might include the type of work you do, your physical premises, what property and equipment you will have and use, your employees and customers, and even your intellectual property.
At M&P Insurance, we provide commercial coverage to businesses across our home state of Arkansas, as well as out of state businesses. Our team works hard to ensure that our customers feel comfortable with and educated about the policy they purchase. If you own a retail business, professional office, contracting business, or other commercial entity, let M&P discuss your insurance options and pricing with you. Visit us online at mpinsureme.com or call today at 870-523-6771.