In 2018 alone, US businesses paid about $343 billion in lawsuits, $182 billion of which was shouldered by small businesses.

The US tort system costs have gone up, and the smaller the business, the bigger the liability burden.

For the lack of sufficient business insurance, some businesses pay as much as $20 million out of pocket. For this reason, we can’t overstate how important it is to have proper business insurance policies.

Some policies are mandatory as required by the government. Others are meant to protect you from unforeseen and foreseen lawsuits. Read on to find out more about the different types of business insurance policies you can purchase.

General Liability Insurance

General liability insurance is an essential component of business insurance. It’s one of the most vital policies that every business must have. It’ll protect your business against third-party lawsuits.

General liability insurance will cover the costs associated with injuries if customer, client, or vendor gets injured on your business premises, or get injured by your products or services. It also covers advertising injuries. These may include things like misappropriation, slander, or libel.

Workers’ Compensation Insurance

Workers’ compensation insurance is one of those mandatory policies required by law for every business. A workers’ comp insurance policy covers employees who get injured on the job. Failure to have one could result in fines and penalties.

At one point or the other, your employee will experience workplace injuries. The policy will cover their medical expenses, lost wages, pain, and suffering.

One of your employees may also decide to sue your company. In this case, the workers’ comp insurance will cover the costs of defending the lawsuit.

Product Liability Insurance

Every business that deals with tangible products requires this business insurance policy. You can purchase one as a standalone policy or have it added to your general liability policy.

Product liability insurance is essential because it’ll protect you from defective package lawsuits.

Disability Insurance Policy

Disability insurance is also required, as it guarantees payments to employees who cannot work because of injuries or illnesses. There’s a difference between a disability insurance policy and workers’ comp. The injuries don’t have to be work-related for disability insurance.

For instance, the policy could cover a pregnant employee after they give birth. This business insurance policy is not required in every state though.

However, in the states where it’s not a requirement, it could make you a competitive employer. It would give your employees peace of mind.

Commercial Property Insurance Policy

A commercial property business insurance policy is essential. It covers your business equipment, inventory, and other properties against damages or losses. This policy is more imperative for businesses with brick-and-mortar stores.

It covers incidents such as fires, vandalism, theft, and certain weather-related damages. Commercial property insurance policies may also cover water damages from leaks and burst pipes.

However, most of them don’t cover natural disasters like floods or earthquakes. If your area is prone to floods, consider getting a flood insurance policy.

Professional Liability Insurance

Professional liability insurance is also known as errors and omissions insurance. It’s vital for businesses that deal with professional service providers like lawyers.

For instance, professional liability insurance will cover the lawsuit if a doctor makes a misdiagnosis. It also helps businesses that commit professional negligence as it covers financial losses.

Business Interruption Insurance

An interruption policy will cover your business in the event of a disaster that prevents you from operating your business. For instance, if you were to experience a fire or natural disaster.

The business interruption insurance will cover your business’ rent, payroll, and taxes. It’ll pay for various other expenses until you get your business back up and running again.

Unemployment Insurance

Unemployment employee insurance is also required by law, as it covers employees upon job loss or termination. Now, unemployment insurance is not something you purchase from an insurance carrier.

Instead, you pay for it along with other payroll taxes. You’ll pay the federal unemployment taxes (FUTA) and state unemployment taxes (SUTA).

Cybersecurity Insurance Policy

In 2020 alone, there was a 424% increase in small business cybersecurity attacks. About 60% of small businesses assume their companies would not be targets for cybercriminals. If this is your line of thinking, understand that any type of business is under threat.

As long as you have sensitive data that can be stolen, it’s imperative for you to have a cyber liability insurance policy. This policy will cover costs associated with recovering your data. It may also pay for public relations expenses, reputation restoration, and improving your security.

Commercial Auto Insurance Policy

Commercial auto insurance is one of the most popular business insurance policies. It’s essential for any business that operates business vehicles. When your business vehicles get into an accident, your commercial auto insurance will pay for the damages and injuries.

Without this policy, you would have to shoulder all these costs out-of-pocket. Car accident costs can be quite a considerable amount. Depending on the number of vehicles you have, you may want to consider comprehensive and collision coverage.

Key Person Insurance

A key personal business insurance policy will cover your business when an essential employee or key executive is unable to work. For instance, if they fill an important role in the company, but become disabled or pass away.

The business may not be able to cope without their skills and expertise. This policy will cover replacement costs and any income lost during the transition.

Types of Business Insurance Policies

As you can see, there’s a significant number of business insurance policies available. Running a business comes with a wide array of risks. As an entrepreneur, it’s vital for you to find a way to protect your business.

Depending on your type of business, research the most important business insurance policies. You can always buy the rest as you expand. If you’re still unsure, please contact us for consultation purposes.