Running a business can be rewarding. Small business owners are known to be some of the most satisfied people in the country. However, it can also be quite stressful as well, and there are a lot of different elements that you need to stay on top of.
For one, you need to ensure that your business is protected against various forms of risk. No matter what risk is out there, there is likely an insurance policy you can take on to help protect against it.
There are some compulsory insurance policies that all businesses must have. These are types of insurance that are required by state or federal law. Failure to have these insurance policies in place can get your business in hot water.
What do you need to know about compulsory insurance? Read on and we’ll walk you through what you need to know.
The Types of Insurance Your Business Needs
The cost of running a business can be quite steep. One of the costs you need to factor in when thinking about your business is the cost of compulsory insurance. These are small business insurance policies that you are legally required to have.
What kind of insurance does that mean? There are a few different types.
Worker’s Compensation Insurance
If you run a business of even moderate size, it’s likely that you’ll be legally required to take out a worker’s compensation insurance policy. This is a policy that is in place to protect your workers and their wellbeing.
You’ll need to have this sort of insurance policy in place the moment that you have employees hired onto the job. The insurance will cover all medical treatment and time off in the event that they are injured during the course of performing work duties.
This is a required form of insurance even if the kind of work your business does isn’t especially risk-inherent.
Slip-and-fall injuries, among other things, are still common. It’s essential that this insurance is place. Failure to provide worker’s compensation insurance to your employees could leave you liable to a number of lawsuits and fines.
General Liability Insurance
Who knows what could happen out there in the world? Accidents and disasters happen every day. That’s why many states require businesses to have a general liability insurance policy in place before opening for business.
This kind of policy ensures that a business will be able to pay settlements in the case some sort of lawsuit is brought against them.
What happens if a visitor to your business slips and falls on a wet floor? What if a resident of the neighborhood is injured by one of your employees performing a work duty? You never know what might happen, and you must have some insurance in place to protect from this.
How much protection you’ll need legally will depend on the kind of work you do. The Small Business Administration has a sliding scale for different industries. More risk-inherent lines of work will be required to take out more general liability insurance than others.
Not all businesses or companies involve driving or transportation. If you run a home business, for example, you likely have no need for auto insurance. Even those with brick-and-mortar stores might not be employing vehicles to complete work-related tasks.
However, if you have purchased vehicles for your business, it’s a different story. Your general liability insurance does not cover car accidents. If there’s a threat of an auto wreck occurring with a work vehicle, you will need to have auto insurance in place.
That’s a state requirement, not something you can get out of. Not only that, but it’s something you’ll want in order to protect the long-term health of your business.
How large of an auto insurance policy you will need will vary depending on where you live. For example, you can compare van insurance and car insurance quotes at Quoteradar to understand what your business may need. It’s advised to look into local laws.
Product Liability Insurance
What about if your business produces a product that is intended for sale and mass production? You’ll need a whole new type of insurance to protect yourself then.
Accidents involving malfunctioning products are also not covered under your general liability insurance. For that, you’ll need to have some sort of product liability insurance in place.
It doesn’t matter how many measures you’ve taken to ensure that your product is safe. You need to have this sort of insurance in place should any lawsuit come forward in response to the use of your product. That’s just business.
Coverage under this kind of policy can be specifically engineered to best work for the kind of product that you are putting out there.
Once again, the amount of coverage you will need in place will depend on how risk-inherent the product you’re selling is. Chemical suppliers, for example, will have to have a much larger amount of coverage in place than a business that sells pens.
Local laws and restrictions also might vary, so it’s important to do your research ahead of time.
Understanding Compulsory Insurance for Small Businesses
It can require a lot to get a new business off the ground.
One of the essential things you can’t forget about? The different types of compulsory insurance you need to have in place before you can get up and running. The above information will fill you in on what you need to know about these various forms of insurance.
Need more business advice, tips, or tricks? Keep scrolling our blog for more information.