Business Insurance Basics
As a business owner, you have a lot on your mind. Launching a product or service, targeting the right customers, and streamlining your operations may keep you on your toes 24/7.
To safeguard your hard work and investment, make sure to purchase appropriate business insurance coverages. Keep reading to learn more about types of business insurance and why commercial insurance is so important for small business owners. If you have more questions, be sure to contact our experts at Mey’s Insurance Services in Riverside, CA.
Why Business Insurance Is So Important
To understand why small business insurance should be high on your priority list, let’s look at what might happen if you don’t have this type of basic protection.
In a nutshell, without a business insurance policy, any unexpected costs—from business equipment damage to medical bills that follow a workplace injury—will come out of your own pocket. Without the right coverage, you may have no choice but to dip into your personal assets to pay for financial losses.
California is home to over four million small businesses employing over seven million people. As in most states, California business owners must provide workers’ compensation for their employees. You must also purchase insurance for any vehicle you use for business purposes.
Most small businesses in California choose an insurance package that also includes general liability and professional liability coverage. While not mandatory, this type of coverage protects company owners from liability claims and devastating legal fees.
Types of Business Insurance Coverage
A business owner’s policy may include several types of insurance products that protect the business’s assets, provide property coverage, help handle legal liability claims, or compensate employees for lost wages. Other small business insurance options, like auto coverage for a new delivery service, may make sense as the business grows.
General Liability Insurance
General liability coverage (GL) can protect business owners in cases of claims that occur due to work operations, including personal injuries, property damage, and damages to rented premises.
A commercial general liability policy can save the livelihood of a small company if an accident on its business premises leads to a heavy liability claim. For example, a client may slip on a patch of wet floor in your store and suffer a bodily injury. Without liability insurance, you would likely carry the sole responsibility of compensating the client for any damages.
Moreover, some clients or partners may require your business to carry general liability insurance before they work with you.
Professional liability insurance, also known as errors and omissions insurance, protects businesses from claims related to mistakes or oversights in their professional advice. Attorneys, accountants, business consultants, engineers, home inspectors, and insurance agents all need this type of coverage.
Let’s say you are a business attorney in charge of revising an important contract on behalf of your client. After signing the contract, your client accuses you of overlooking a tricky clause that allegedly made them lose a lot of money. If the client presents valid claims, your professional liability policy might help cover the settlement costs up to a certain limit.
Business Property Insurance
Commercial property insurance can cover tools, merchandise, and personal property damage in cases of unexpected events like fires, severe storms, burglary, or even roof collapse. This type of insurance is absolutely essential for any business working on physical premises.
Please keep in mind that every business property insurance policy is different. Many policies exclude catastrophic events like earthquakes and floods, regular wear and tear, or theft by employees. Before you buy a policy, make sure to know exactly what it covers.
Business Income Insurance
Business income insurance, aka interruption insurance, often works together with property insurance. This type of coverage compensates a company for temporary loss of income that occurs because of circumstances like physical property damage or other unforeseen events.
Usually, income insurance activates while a company works on repairing damaged property and returning to operation. The policy will typically pay for employee wages, rent payments, and taxes.
Commercial Auto Insurance
Commercial auto insurance provides coverage for any business vehicles including cars, vans, trucks, and trailers. Typically, commercial vehicles run more risks and suffer more wear and tear than personal vehicles, so they need a commercial insurance policy.
A small business owner may overlook commercial auto insurance if they use their personal vehicle for company needs. You may occasionally run company errands or transport equipment in your car. However, a personal auto insurance policy won’t pay for damages if you suffer an accident while driving clients or making a delivery.
Unlike health insurance and other optional benefits, workers’ comp is mandatory for all businesses in California, no matter how many employees they have. Operating a business without carrying workers’ compensation coverage violates the California Labor Code and may lead to heavy fines or imprisonment.
This type of business insurance provides protection for employees who suffer an injury or illness on the job. The policy will pay for medical expenses, rehabilitation, a percentage of lost wages, and death benefits. Some policies also cover third-party injuries.
Workers’ compensation covers injuries and illnesses related to work duties even if they happen off-site. For example, workers who sustain injuries while traveling on business would receive compensation.
Business Insurance Cost
The cost of business insurance varies widely depending on the type of business, its number of employees, its mode of operation, and other factors. For example, businesses that serve customers in a physical location will require different coverage than an online-only service. A food delivery business will need commercial auto insurance, while a pet grooming salon may not require vehicle coverage.
Professionals working in riskier industries can expect to pay more for insurance protection. For example, electricians or roofing contractors will typically have costlier insurance options compared to personal trainers and dance instructors.
How to Choose the Right Insurance Agent or Company
Many small business managers know very little of what they can expect from a business owners’ policy, what sort of protection each insurance package provides, or how insurance claims work. Working with the right agent or broker to insure your company will help preserve your peace of mind.
Look for an insurance company or agent who:
- Has local industry knowledge. For example, if you own a landscaping business, ideally you should work with an insurance company that has helped provide coverage for other home and garden maintenance services in your area.
- Can meet your needs. The insurance company or broker should specialize in business coverage and be able to provide comprehensive protection for your type of industry.
- Has enough experience. How long has the insurance company or broker been around? Avoid risking your business by working with a novice who may overlook important details.
- Provides references. A credible agent or broker will be happy to display genuine testimonials by real local customers. Check out the insurance company reviews on Google, Yelp, and similar sites.
Mey’s Insurance Services has been in business for 25 years. Our professional work, excellent service, and dedication to our clients’ needs make us the go-to local business insurance choice.
Mey’s Insurance Services: Our Professional Services Protect Your Business in Riverside, CA
You have built your business, so now it’s time to protect it. Mey’s Insurance is here to help you meet all your business insurance needs in a convenient one-stop, expedited service.
For a competitive business insurance quote by a licensed agent from Mey’s Insurance Services in Riverside, CA, call us at 951-684-0494.