As a business owner, you must know you’re covered for all risks. There are many insurance products available on the market today, but not all of them are created equally. Some only offer limited protection for certain businesses or industries, while others may be too expensive or inaccurate for your needs.
The following list features six types of insurance that every business owner should consider purchasing to protect themselves and their company:
1. Employment Practices Liability Insurance (Epli)
This insurance protects your business against claims filed from within the company or lawsuits related to employment practices.
EPLI protects everyone those are involved in the work process. It covers the cost of legal representation and settlements if an employee or former employee sues you over an employment issue. According to Transparity Insurance Services, EPLI covers claims of discrimination, wrongful termination, sexual harassment, retaliation, and invasion of privacy.
EPLI costs can range based on the size of your business, the amount of coverage needed, the type of industry, risk factors like implementing a sexual harassment policy, and claims history. On average, it costs about $500 annually for the coverage of $1 million for small businesses with less than ten employees, as per Counterpart. However, it can cost up to $5,000 annually for companies with about 100 employees.
2. Errors And Omissions Insurance
It is a type of professional liability insurance that protects you from claims of negligence, wrongful acts, errors, and omissions. In other words, if you screw up the job for a client, E&O coverage will protect your business against any legal action taken by them as a result of your mistake.
If someone is injured on your property or develops an illness after eating at one of your restaurants and they blame it on you, you could be liable for damages. It could include medical bills related to their injuries or illnesses and legal fees associated with defending yourself against lawsuits filed by those who were hurt in your establishments.
It is worth noting that EO insurance protects businesses only when they are found responsible for an incident that causes harm. If someone else commits an act against another person, then this type of coverage would not apply.
There are two types of E&O policies available. Errors & Omissions Liability Insurance (EOLI) covers claims arising from negligence, while Professional Liability Insurance covers wrongful acts committed by employees working within scope-of-employment.
3. Trade Credit Insurance
This insurance protects your business from the risk of non-payment of goods or services. For example, if you sell things to other businesses, you can use Trade Credit Insurance to cover the cost of those goods or services.
If you’re looking for ways to mitigate this type of risk, understanding and mitigating Trade Credit Insurance can be complex. However, businesses looking to expand into new markets with potentially challenging political or foreign currency exposure should look into Trade Credit Insurance options for their company.
You can use Trade Credit Insurance to cover a variety of situations. For example, under the terms of your policy, you may recover the cost of goods damaged or lost while in transit from seller to buyer. Goods damaged during goods-in-transit cost millions of dollars yearly to businesses in America, as per Conner Industries.
Learning from one example of loss due to damage when goods-in-transit, businesses must have a trade credit policy. It is known as “supply chain risk” and can be mitigated by purchasing Trade Credit Insurance.
4. Product Liability Insurance
It covers the cost of a lawsuit filed by a customer who has been injured by your product. It also covers the cost of defending yourself against such a lawsuit. This type of insurance is necessary for businesses that produce, sell, or distribute products to consumers.
This type of coverage is especially necessary if you have a physical store where customers can touch or try on items before purchasing them. Because in this case, there is a greater risk that someone will be injured while using your product and file suit against your business for damages caused by their injury.
It’s worth noting that product liability insurance does not cover instances where you are held liable for any harm caused by the negligence of a third party. So, for example, if you are sued because someone else using your product injured another person, this insurance will not cover legal costs or damages awarded against you.
5. Supply Chain Insurance
This coverage protects the business when they are responsible for the loss or damage to goods supplied to another company. It can include any type of good, from food to clothing and more. It also applies to any supply chain, whether you’re selling your products on Amazon or directly to consumers through your e-commerce site.
If you use an independent distributor or manufacture in-house, supply chain insurance will help protect you against any potential losses. The insurance will cover product loss or damage, customer property damage, third-party property damage, legal costs, and legal fees resulting from a lawsuit.
6. Cybersecurity Insurance
Cybersecurity insurance covers the cost of your business’s data breach. It can include coverage for costs related to investigating a breach, hiring a forensic team, and responding to a data breach.
The policy also protects lost business income or loss of business reputation and money paid in penalties from regulators or law enforcement agencies resulting from a cyber attack.
Cyber-attacks are becoming more common, and small businesses are soft targets for fraudsters. With a global increase in cyberattacks by 38% in 2022 compared to 2021, as reported by Check Point, cybersecurity insurance is becoming a necessity for businesses. However, cyberattacks are not limited to small businesses, and many MNCs have become victims of such incidents.
There are two types of cyber insurance, i.e., first-party and third-party. First-party insurance covers the costs of a data breach, including forensic investigation and remediation. In addition, this type of insurance may include coverage for the cost of hiring outside experts to investigate and clean up after an attack.
Third-party insurance covers damage to your company’s reputation and financial loss due to a data breach. This type of cyber insurance may include coverage for legal costs, regulatory fines, penalties, or reputational losses.
Ensure That You’re Covered
The right insurance can help you avoid paying out of pocket for things like cyber security and data breaches, which can devastate your business. It’s also crucial to ensure that your business stays protected against lawsuits so that if someone sues for negligence or fraud, the insurance company will step in on your behalf.
As you can see, there are many insurance that business owners need to consider when they’re looking at their options. Not only will these cover your company against unexpected losses, but they can also help you avoid costly lawsuits and keep your business running smoothly.
Abdul Aziz Mondol is a professional blogger who is having a colossal interest in writing blogs and other jones of calligraphies. In terms of his professional commitments, he loves to share content related to business, finance, technology, and the gaming niche.