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What Does Small Business Insurance Cover?

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You should consider getting small business insurance if you own a small business. Depending on the type of business you run, the products or services you offer, your processes, and your location, you could even be required to own an insurance policy.

But what does small business insurance cover? Well, that all depends on the type of coverage you’re interested in. Of course, you can choose more than one type of coverage for your small business. Your insurance policy should be designed to meet your unique needs, so you should contact a small business insurance company to learn more about what they offer.

You never know what might happen, and protecting yourself from risks that could affect your business and your daily life is always a good idea. Here are seven coverage options you could choose to get.

1. General liability insurance

If you decided to get a loan to start your small business, your lender probably required you to at least have general liability insurance. And indeed, it’s a good idea to add this type of coverage to your insurance policy.

General liability insurance protects you from claims of property damage or personal injury that could be made against your small business.

If a customer or another business decides to sue you, your general liability insurance will cover your legal costs. When you don’t have this type of coverage, you need to pay out of pocket, which can threaten the financial stability of your business.

2. Commercial property insurance

On the other hand, commercial property insurance protects you from financial loss related to damage that could be done to your property.

That includes the physical location of your small business but also your equipment, your tools, your computers, your supplies, and your inventory.

Your commercial property insurance would cover damage caused by fire, water, lightning, hail, and wind, but also by theft and acts of vandalism. If anything happens to your property, your insurance coverage will pay so you can get everything repaired or replaced.

3. Business interruption insurance

Business interruption insurance can also be called business income insurance. It covers the income your small business would lose if you had to temporarily shut down due to circumstances beyond your control.

Think about unpredictable issues such as theft, fire, lightning, and wind.

Of course, commercial property insurance would cover the damage caused by these events. But business interruption insurance would replace the income you would lose from not being able to run your business after a theft or a natural disaster.

4. Commercial auto insurance

Small business insurance also covers the damage done to the vehicles your business uses if you choose to get commercial auto insurance.

This insurance coverage is necessary if your small business uses only one car or has a small fleet of trucks or vans. Your auto insurance will not be of any help to protect a vehicle driven for business purposes.

If you or your employees get involved in an accident or if one of your business vehicles gets damaged, your commercial auto insurance will cover it.

5. Errors and omissions insurance

Adding errors and omissions coverage to your small business insurance policy is a good idea if you provide professional advice to your clients.

This type of coverage will protect your business if a client claims you. For example, if you ever get accused of giving false or inaccurate advice, your insurance will pay your legal costs, including judgment and settlement.

But if your policy doesn’t include errors and omissions insurance, you will have to pay to defend yourself if you ever get sued.

6. Cyber liability insurance

As long as your small business has a database, you need to take measures to protect it. This is why cyber liability insurance can come in handy.

It covers the costs associated with cyber-attacks and data breaches. If your database gets compromised, your cyber liability insurance will pay for notifying your customers of the breach.

And if a customer files a claim against your business after a cyber attack, your insurance will cover your legal costs.

7. Commercial crime insurance

Finally, commercial crime insurance is a type of coverage that protects you from employee theft, forgery, or fraudulent activities.

If ever one of your employees does something dishonest that results in important financial losses for your small business, your commercial crime insurance will cover these losses for you.

Even if you trust your employees, this type of insurance should help you keep your peace of mind, knowing that you will be covered if something fraudulent occurs.


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