You’ve worked hard to develop your business, and now it’s time to protect your investment and get the most out of your company. While there are some unavoidable risks with any small or medium-sized business, you can protect yourself and your company with the right kind of business insurance. Different types of insurance for small and medium-sized businesses can not only provide you with the support you need in the event an issue should arise, but these policies can also maximize the value of your company when it comes time to sell. Having the right coverage is also an important factor in determining the value of your business.

What to Consider When Choosing a (Better) Policy

When it comes to determining what type of insurance coverage you need for your business, it’s important to consider a few key factors. First and foremost, you need to know your business’ major risk factors. Anticipating these issues will help you curtail an expensive disaster with the right type of business insurance. It is also important to keep your current assets and projected growth in mind as you shop around. Doing so will help you increase the value of your company and get the most out of it as you prepare to exit.

Most Important Coverage for Businesses

A great way to add value to your company and maintain your integrity as an effective businessperson is to avoid the common pitfalls of loss and damage. Insurance coverage is an important component of this effort. Having adequate coverage and determining what additional policies are right for your company is essential. The right kind of insurance can make all the difference.

General Liability Insurance

General liability insurance covers property damage as well as personal and bodily injury related to business operations. Every business makes mistakes and, unfortunately, these mistakes could lead to physical harm of an individual and/or their property. General liability insurance provides coverage in the event that you incur costs due to medical treatment, damaged property and/or or legal fees related to your business processes. For example, if the construction company you own damages a customer’s property, general liability insurance would cover the cost of those damages.

It’s important to note, however, that this type of coverage does not protect your company from claims of negligence (i.e. when you could have prevented the damages, but didn’t). So, it is still important to manage your company effectively and employ safe practices. Even just one accident caused by standard business operations can be extremely costly to your business. In fact, one mistake could take your business under without the right type of coverage, which is why it is so important to include general liability insurance as one of your primary policies.

Commercial Property Insurance

Protecting your business with an effective business emergency preparedness plan is another way to make your business more sustainable and more attractive to potential buyers. Commercial property insurance is one component of this plan. Commercial property insurance protects your company from loss of tangible assets, which are the physical assets that add value to your business, such as your building, physical inventory, equipment and so on. This coverage protects your business from loss due to fire, storm, other natural disasters, and even theft and vandalism. Protecting your business from this type of loss is a key step toward investing in your assets and protecting the overall value of your business.

Errors and Omissions Insurance

If you provide services to your customers, errors and omissions (E&O) insurance, also known as professional liability insurance, is of utmost importance. This coverage protects you from client claims made against your business for services rendered that don’t meet the results previously promised to the client. E&O insurance covers legal fees as well as court costs and settlements, should a client sue you.

It is particularly important for you to have E&O insurance if you provide recommendations, guidance, advice and/or other services. Business owners who typically carry this type of coverage include accountants, lawyers, doctors and event planners.

Business Owner’s Policy

To cover all your bases and get all the required coverage you need as a business owner, you should also look into a business owner’s policy (BOP). This type of coverage typically bundles everything, including business interruption insurance, property insurance, vehicle coverage, liability insurance, and even crime insurance into one convenient policy. In most cases you can also modify a BOP to include the specific types of coverage you need.

This type of coverage is a great way to protect your business yet save money, as most agencies offer a deal for bundled products like this. However, it is important to check individually as each insurance agency is different.

Worker’s Compensation

Worker’s compensation is one of the most important policies to have in place if you have employees working for you. This type of insurance covers wage replacement as well as medical costs to individuals who are injured on the job.

It is important that business owners and employees understand that an employee gives up his/her right to sue his/her employer in the event that worker’s compensation benefits are provided. This not only protects the workers, but it also protects you and your company from costly legal ramifications.

Protect Your Business While Maximizing Value

If you are interested in selling a business, it is important that you understand the business valuation methods and have the right components in place to maximize the value of your company. The right insurance is an important component in not only protecting your business for the long-term, but also upholding its value in the present. It is also a good reflection of your company values when you have the right systems and coverage in place. These five policy recommendations should be non-negotiables when it comes to having the right type of coverage for your small to medium-sized business.