According to the laws of the State of Colorado, worker’s compensation insurance is mandatory for small businesses. However, there are several other types of insurance plans that you should consider as well as a business owner.
Worker’s Compensation Insurance
For a lot of states in the US, including Colorado, worker’s compensation insurance isn’t optional. You need a policy in place as soon as you’ve hired your first employee. Even when not required by law, the policy provides protection against medical expenses and lawsuits related to workplace injuries. Also, it’s very useful when employees lose wages as a result of work injuries.
Economically the worker’s compensation policy makes sense, since it shields your company from financial devastation. A critical workplace injury would demand that you pay for the medical bills, whether it’s carpal tunnel syndrome or a broken leg.
In terms of workplace injury lawsuits, worker’s comp pays for court costs, attorney fees as well as settlements and judgments.
General Liability Insurance
For many businesses, this isn’t required by law, however, it’s very useful to have. It covers small business risks like customer injury or property damage. It insulates your business from lawsuits and helps qualify for contracts and leases.
For customer injuries and customer property damage, it helps pay for legal defense costs and court costs.
While not mandated by law, it may be expected by your clients, mortgage company, or landlord. Think of it as a safety net.
Example of what general liability insurance covers is injuries that occur in your premises like a slip and fall injury.
Professional Liability Insurance
This is a specific case of liability insurance and is applicable when lawsuits are filed for incomplete or unsatisfactory work. It’s specifically designed for companies that make a living off their expertise or skill in a specific field. It’s also called e&o insurance.
Even the most experienced, consummate professionals can make mistakes. Hence, when their errors or oversights result in unsatisfactory work, clients may not be very understanding. That’s why professional liability insurance covers inevitable slip ups that could potentially happen.
However, the insurance doesn’t just cover mistakes and errors or failure to live up to quality standards. It also covers omissions in your work or missing a deadline. These can have real world consequences and cost your clients money. Hence, they can sue for the damages resulting from them.
This year, due to COVID-19, several businesses have had to cut staff or shift work operations, or stop work altogether. As a result, many companies have missed deadlines or delivered on work later than usual. While in most cases, clients may be understanding of the situation, in some cases, that may not work.
All in all, professional liability insurance covers work mistakes and oversights, undelivered services, and missed deadlines. It also covers claims of negligence.
Cyber Liability Insurance
With the number of ransomware attacks, phishing attacks and hacks occurring every year. Especially if your company’s business is intrinsically linked with the internet and data, you can’t afford not to have it.
Cyber liability insurance protects your business against malicious software attacks, data breaches, etc. at the basic level. It also covers legal feels, customer notifications, credit monitoring, and fines that your company may have to pay.
Most companies today work with data and operate online at some level. There’s no getting around it. Most businesses have email accounts, social media pages, and cloud databases. The sizes may differ, and the data value may hugely differ, but data protection is required.
The average cost of a small business data breach is in the tens of thousands of dollars. Every year that climbs little by little. Cyber liability pays these costs and shields your company from fines that can bankrupt you. This isn’t a paltry problem. Companies that were tech behemoths like Yahoo! have been reduced to shells of their former selves due to security breaches.
According to Verizon, 61% of all cyberattacks hit small businesses. So do yourself a favor, and get cyber liability insurance.
Business Owner’s Policy
This is a bundle of general liability, property and other coverages. This costs less than if the policies were separately bought. Hence, it makes more economical sense to get them together as a bundle.
You need a business owner’s policy if you own or rent a workspace. Since most small businesses already need general liability and commercial property insurance, this one’s a no brainer.
Hence, a business owner’s policy is a wise choice even if it’s not mandated by law. For businesses that work directly with the public and own property, it’s a good idea to look into business owner policy. Not only does it protect you from financial loss and customer accidents, but from fires and burglaries.
97.6% of all Colorado businesses are small businesses. There are over half a million in total. Even if you put the competition aside, it’s a very nerve wracking thing to start a business. There are a hundred different things you have to think of before you make a single decision. As a business owner, protecting your business from potential risks and getting proper business insurance is a good idea.