13 Types of Insurance Small Businesses Should Consider

January 27, 2012

In a recent article by the Small Business Authority they outlined 13 types of insurance that a small business should consider. Clearly some – like auto and workers comp – aren’t up for consideration, they’re usually required. However, general liability insurance was listed as number 1 and professional liability insurance as number 6. In my experience, and this is backed up by the research Hiscox has conducted with small professional services, most small business will use their insurance budget to buy the liability insurance coverage before they buy property coverage. I believe that the reasons for this are : Firstly, it is quite often the case that the purchase is not a voluntary one – but is instead driven by a client or landlord asking for the coverage being in place as part of a service or property rental contract.

Secondly, cash flow is king and often a small business needs to make tough choices on what coverage to buy. Many businesses are willing to take the risk of lost, damaged or stolen business property on their own dime – particularly with the costs of technology coming down. Instead, the event that could really bring a business down is an unexpected lawsuit – which can appear from a disgruntled client, even if you haven’t made a mistake. Such a lawsuit threatens the very existence of a small business, and this is not just because of any subsequent monetary awards at the end of the process. Instead, it is more to do with the significant distraction it causes, the cost of defending the lawsuit and defending the reputation of the business. It is in situations like this where the cost of professional liability insurance is a relatively small investment in small business insurance that can save the day.