How to choose the best insurance for my small business
Buying business insurance may seem complicated, but it doesn’t have to be. Still, the insurance business seems to have a language of its own. What’s the difference between General Liability and Professional Liability? And what is E&O? I’m a business owner – does that mean I need a Business Owner’s Policy?
Here’s an easy way to find out what you need. Just answer these six questions, and we’ll show you what kind of coverage can help keep your business well protected.
1. Do you operate from your home, a space you don’t own, or a client’s premises?
If so, you need General Liability insurance, the basic coverage that every business needs. General Liability covers third-party claims of property damage, bodily injury, and more. So if someone (other than yourself or an employee) says you damaged their property or caused them to be injured, your General Liability policy could cover the cost to repair or replace the damaged property, or pay for their medical expenses, including lost wages.
2. Do you own the commercial building you operate from?
If so, a Business Owner’s Policy (BOP) will cover your business premises and property, in addition to providing the third-party coverage of General Liability coverage. If your building – and your property inside it -- is damaged, a BOP could cover the cost to repair it and get you back to work.
3. Do you have business equipment (computers, furniture, tools, etc.)?
If you have equipment that you rely on to get your work done, consider a Business Owner’s Policy (BOP). This includes General Liability coverage, plus first-party coverage for your own business property. Suppose your computers, tools, or office furnishings, or equipment are damaged or stolen. In that case, a Business Owner’s Policy will get you back to work quickly by repairing or replacing your property.
Remember, if you have a BOP, general liability coverage is included, so you don’t need a separate GL policy.
4. Do you provide a service or regularly give advice?
If so, you need Professional Liability insurance. This is sometimes called errors and omissions or E&O coverage. It protects you from claims that you did something you shouldn’t have done (an error) or didn’t do something you should have done (an omission). You can be sued for just about anything, even if you haven’t made a mistake or the client didn’t follow your advice. And even a baseless lawsuit can be expensive to defend. Professional Liability coverage will pay your defense costs, as well as a settlement or judgment, on a covered claim.
5. Do you maintain a website or store sensitive data, like credit card or social security numbers or health information?
If so, you should have cyber insurance. Cyber insurance covers the costs associated with a hack or data breach, including ransomware demands. Equally important, your Hiscox cyber policy includes CyberClear Academy, a suite of training tools to help you and your employees prevent a cyber incident in the first place, as well as crisis management services from breach response experts.
Related: What’s your cyber security IQ?
6. Do you have employees?
Virtually every employer is required to have workers compensation coverage, which pays medical costs and lost wages for employees who are injured or become ill on the job. The fines for not having this coverage are significant, and an uninsured employer would have to pay an employee’s costs out of pocket, so this is crucial coverage for employers.