Types of insurance to help protect small businesses
Review different types of insurance for small business owners and other important planning tips.
Whether you’re working a side gig or employing hundreds, you’re investing valuable time and expertise in your small business. And while you’re rightly focusing on your goals, you should also consider what you’ll lose if you’re hacked, injured, sued or faced with any number of other business financial realities.
A business financial checklist can be a great starting place to figure out options to help you save and protect your financial future. Here are some ideas to get started.
What insurance could a small business need?
Individual health insurance
In qualifying states, individual health insurance provides the essential benefits required under the Affordable Care Act. You might also qualify for supplemental insurance to help pay for things not covered by your primary health insurance policy, such as deductibles, private duty nurse fees, extra transportation and unexpected child care. This may help everyone, especially those who aren’t covered through another employer or group.
Short-term and long-term disability covers some of your income to help pay bills, mortgage payments or rent, groceries and car payments, if you become totally disabled due to an injury or illness.
This insurance provides income to named beneficiaries when you pass away. It can also be used to pay taxes and other transfer expenses, as well as satisfy debt. Business Life financial products such as the Buy-Sell Agreement and Key Employee Insurance can help ensure business continuity if something happens to you or a key employee.
Professional liability insurance protects your business and personal assets in the event of covered claims or lawsuits claiming negligence or failure to perform professional services. This insurance is also known as malpractice or errors and omissions insurance and can help businesses that provide services, advice or guidance, such as accountants, ad agencies, appraisers, bookkeepers, brokers, doctors, engineers, event planners, barbers, beauticians, dentists, financial planners, insurance agents, lawyers and writers.
Workers' compensation insurance
Since it is required by most states, obtaining this type of insurance as soon as an employee is hired can be a good idea. If your employee gets injured or dies as a result of their job, workers’ compensation insurance provides benefits that can help cover medical treatment, ongoing care, replacement of lost wages or funeral costs.
Business property and contents
A business insurance policy covers your building and other structures where you work or store business property, and covers items such as inventory, furniture, computers, tools and equipment that could be stolen or lost in a fire or other covered loss. You can also purchase coverage for a business vehicle, mobile equipment and tools. This type of insurance may help retailers, offices, distributors, restaurateurs, landlords, contractors and a range of nonprofit and for-profit businesses, both in-home and out-of-home.
Small business succession planning and estate planning
Do you know what is going to happen to your business in the event of your death? Take care of the future of your business by having a succession plan in place. The plan will indicate your wishes to sell the business or name a partner, family member or perhaps an employee to take over the responsibilities.
It is important to have a plan for your business that conserves and distributes property before and after your death. Among its goals: provide cash payment for estate expenses; provide income to your family members; provide for the disposition of a business at death; distribute assets to family members and other heirs in a tax-efficient manner; and aid in financial planning for an individual with special needs.