Today, insurance companies offer coverage for just about anything. From health insurance and homeowner’s insurance to auto insurance, pet insurance and plenty more. There’s even alien abduction insurance, falling satellites insurance, and body parts insurance (like when KISS frontman, Gene Simmons, insured his oddly long tongue that he waggled at audiences during KISS concerts, for one million dollars, and no, we’re not making this up). But when it comes to protecting small businesses, what is truly needed is small business insurance. Small business insurance can save small businesses from suffering the financial consequences of all kinds of unforeseen events such as lawsuits, natural disasters, theft, cyber attacks and other calamitous incidents.
Standard small business insurance
As a responsible small business owner, you probably already know this and likely have a standard small business insurance policy in place for that very reason. A standard small business insurance policy covers the essentials like business property damage, which protects a business’ building and the contents within it; general liability coverage, which protects a business against claims if someone is injured on its premises; and business interruption coverage, which helps the business replace lost income or additional expenses incurred as a result of a disaster. But that’s not all that small business insurance can do.
It can also protect your business growth
As a risk management tool, business insurance places the risk of a major loss on the insurance company rather than on the business, so that the business is protected from sustaining a larger and more devastating financial loss in case a business disaster strikes. This is especially important for small businesses that would probably be unable to recover from such financial losses. Basically, small business insurance is a safety net that protects business growth by minimizing the uncertainties under which a business operates, so that rather than feeling constrained by those uncertainties, business owners feel the freedom they need to focus on managing and growing their business.
Sweetening the pot is that most small business insurance policies can be customized to a particular business’ insurance needs. For example, they can be customized according to industry, size, location, scope of operations and even business experience. The ability to customize an insurance policy is very important to small businesses that don’t have the budgets that large enterprises have. By customizing and designing an insurance policy according to a business’ specific needs, and eliminating unnecessary coverage, insurance costs can be minimized.
It should be noted, however, that a standard small business insurance policy does not cover all insurance needs. Auto insurance, workers’ comp, and health and disability insurance for instance, require an alternative policy. Some small businesses, therefore, initially choose to forgo these types of insurance to save on costs. When this is the case, a standard small business insurance policy is a good insurance policy to start with to protect your business. The other types of insurance coverage can be added as needed and when financial resources are less restrictive.
Another type of insurance that is not covered by a standard small business insurance policy is cybersecurity insurance. Cybersecurity insurance is an often overlooked and underutilized type of insurance that all small businesses must consider in today’s digital era. Standard property insurance, for example, covers only tangible assets; it does not cover data. In contrast, cybersecurity insurance, which should work in tandem with a strong cyber defense program, covers lost or compromised data caused by a cyberattack. Depending on your policy it might also cover the repairs for damaged computers and networks, downtime and lost revenue, and legal fees incurred as a result of a breach. Cybersecurity insurance policies can also cover the cost of notifying customers and clients about the breach and even the ransom payment if a business is attacked by ransomware. Given that there was a 424% increase in the number of new small business cyber breaches last year and that small businesses spend an average of $955,429 to restore their business to normal operations after an attack, cybersecurity insurance and good cyber hygiene should rank high on any small business’ priority list.
Like skydiving without a parachute
Business insurance has changed and developed to keep pace with how businesses in general have changed and developed, so today businesses have access to insurance policies that can be customized to their specific needs, which is particularly important for budget-conscious small businesses. For owners of small businesses, whether they’re just starting out or growing into larger businesses, small business insurance is the best way to mitigate liability. It also protects business growth because it gives business owners or managers peace of mind to manage and grow their business. They know that if they’re hit with some unexpected losses, they’re covered. On the other hand, running a small business without small business insurance can feel a bit like skydiving without a parachute.