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  • Katie Truesdell, NFIB

Essential Types of Insurance for Every Small Business

Whether restaurant or retail, this is your guide to getting the right coverage.

You may already be familiar with the different types of insurance available for small businesses, but the question of what kind of coverage is best for your specific business warrants a more in-depth consideration.

Earl VanBuskirk Jr., strategic product manager for Select Solutions Insurance Services, and Keith Turnbaugh, NFIB member and owner/broker of Kansas Preferred Insurance Group, weighed in on the issue. Here’s a look at the most important types of insurance to consider for the five most common business types.

For brick-and-mortar retail stores:

  • Commercial auto insurance provides protection if you purchase a vehicle under your business’ name, rent a vehicle, or have employees who use their own vehicles for delivery operations or errands.

  • Inland marine/ocean marineinsurance provides protection during the transportation of goods (via land or water) that you’re purchasing or selling and that you’ve assumed the responsibility for until they’re received or delivered. Protection can be expanded to air transit as well.

  • Product recallinsurance covers loss of business income and first-party expenses incurred if you need to recall a product, pull products from the shelves, and repair your business’ public image.

  • Equipment breakdown, or boiler and machinery, insurance covers the cost to replace damaged equipment that is necessary to keep the business running—such as your point-of-sales system—along with ancillary costs accrued and income lost as a result.

For restaurants:

  • Food spoilage insurance covers the cost of lost food in case of a power outage.

  • Product recall insurance provides protection in case of foodborne illness or food contamination, including the costs to recall food, shut down the restaurant, test employees or patrons for sickness, and repair the restaurant’s public image.

  • Commercial auto insurance provides protection for use of a vehicle (whether purchased under the business name, rented, or employee-owned) in catering or food delivery operations.

  • Equipment breakdown insurance provides the same coverage described above for equipment integral to the restaurant’s function, such as the oven.

For service-oriented or consultant businesses:

  • Inland marine/ocean marine insurance can protect any tools, equipment, or products owned by your business or purchased as part of a service job that are in transit or on a jobsite.

  • Professional liability insurance provides protection in case errors or omissions are made in providing professional advice or services, leading to harm or loss for the client.

For manufacturers:

  • Manufacturers error and omissions insurance extends basic general liability policies to cover claims that arise because of faulty workmanship, materials, or products and damages resulting from error, omission, or negligence.

  • Equipment breakdown insurance provides the same coverage described above. It’s especially important for manufacturers because they have high exposure to equipment breakdown with many pieces of heavy, expensive equipment that keep the business afloat.

  • Product recall insurance provides the same coverage described above. It’s crucial because manufacturers shoulder a heavy burden during product recalls.

  • Inland marine/ocean marine insurance covers all products that manufacturers import and export from port to port and dock to dock.

If you’re an online-only business:

  • Cyber insurance protects a business in the event of a data breach that reveals confidential, personally identifiable information of customers. It also covers liability arising from a website’s content.

VanBuskirk and Turnbaugh also advise that all businesses should carry commercial general liability, commercial property, business interruption, commercial umbrella/excess liability, management liability, and crime insurance policies. A business owners package comes with most of these already built in and can be customized further by a broker.

“The most important thing a business owner should consider is selecting a broker that actually has experience with insuring business and one that can offer them many coverage and insurance company options,” Turnbaugh says. This will ensure you get the right coverage for the best price in the market.

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