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Types of Business Insurance for a Small Business

By Floyd Arthur

If you are just starting a small business, you probably know that you need business

insurance to protect yourself from financial risk. But with so many different business

insurance products available, you may be having some difficulty deciding what type of

business insurance is essential and which you can forgo, at least for a while.

Types of business insurance for small business

To make the decision a little easier, here’s a helpful guide to the most common types of

business insurance for small businesses and the protections they offer.

Commercial General Liability Insurance

Also called CGL insurance, this type of business insurance policy protects you in the

event another party is injured as a result of your or an employee’s negligence. Typically,

CGL policies cover:

Bodily injury

Accidental property damage

Medical expenses

Libel and slander

Costs associated with defending lawsuits

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Settlement costs and judgements

Commercial Property Insurance

Commercial property insurance is business insurance that covers property damage due

to a variety of “covered events.” These usually include damage due to fire and smoke,

water and wind, vandalism and the like.

Business insurance policies differ in how they define “property,” but most cover damage

to:

Physical premises,

Business equipment and furnishings

Inventory

Company papers

Cash

Digital assets are usually not covered, so it’s a good idea to store a backup of all digital

property either off site or online. Keep a copy of passwords, account numbers, and other

important records off site as well.

Business Interruption Insurance

Business interruption insurance helps keep your company going in the event your

operations are temporarily interrupted by a covered event. If, for example, your office is

rendered unusable due to a fire or weather event, the policy will pay for you to set up

shop somewhere else for a specified period of time.

Business interruption policies typically cover:

Relocation costs

Lost income

Payroll expenses for employees who continue to work

Operational expenses that continue even though operations are temporarily suspended

(for example, utility bills.)

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Business interruption insurance generally mirrors your property and casualty policy.

Thus, if your commercial property insurance does not provide coverage for damage due

to floods, your business interruption insurance will exclude this coverage as well.

Product Liability Insurance

Product liability insurance protects you in the event a product you manufacture or sell is

defective and causes harm. Examples of product liability claims include:

Design defects -- These occur when the design of the product renders it dangerous or

useless.

Manufacturing defects -- These are unintended defects that occur when a product varies

from the intended design and dangerous as a result

Failure to warn -- This occurs when a product is inherently dangerous but is not properly

marked with warning labels or instructions for care.

In most states, any party involved in the supply chain for a defective product, including

the manufacturer, distributor, wholesaler and retail supplier, may be held legally liable

for damages under a product liability claim.

Professional Liability Insurance

Professional liability insurance, protects professional service providers against claims of

negligence, bad faith, misrepresentation, unethical business practices and giving

unsound advice. Also called errors and omissions coverage, it is important coverage for

businesses such as:

Realtors

Attorneys

Insurance professionals

Financial consultants

Estate planners

Physicians (medical malpractice insurance)

To ensure that your small business has the optimal business insurance coverage, consult

an insurance professional at Carmoon Ltd. today. We are available Monday through

Friday from 9 a.m. to 6 p.m. at 516-292-3780, so call us to set up an appointment to

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discuss your business insurance needs today. Or if you prefer, request a free

consultation online and we will get back to you right away.