Why Your Business Insurance Needs Depend on Your Industry

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Your company needs business insurance. Having insurance coverage helps you handle the costs involved with liability claims and property damage. If you don't have business insurance coverage to handle such matters, you might wind up paying out-of-pocket for claims filed against you. That eats up your profit margin fast and wastes precious money. However, while business insurance, in general, is always necessary, the specific kinds you need will vary based on your industry.

1. The Starting Trio

Before you get too worried about specific kinds of business insurance you might need based on your industry, you need to make sure you have the foundations covered. Nearly every business in operation needs three basic kinds of company insurance, according to The Hartford. The first is general liability insurance, the second is commercial property insurance, and the third is business income insurance. It is possible to find an umbrella policy that includes all three kinds of coverage in one single policy.

2. Earthquake/Flood Insurance

If any of your business activities take place in regions or locations prone to flooding or earthquakes, then you might need specific policies for such disasters. Commercial property insurance rarely covers matters such as these, so check your current policies if you have any locations at risk of either disaster.

Coverage for flooding and earthquakes is possible but can also be expensive. Be prepared to make a judgment call about paying for it versus relocating your operations. Some states might require coverage for such disasters in risky regions for you to do any business there.

3. Data Breach Insurance

If your business stores personally identifiable information, then a data breach might result in some or even all of this data being lost or stolen. Data breach insurance is also known as cyber insurance. Whatever you call it, it can help cover the costs associated with notifying impacted people, offering them services to monitor their identity theft, and formulating your company's public relations campaign.

4. Franchise Requirements

If your business is a franchise as part of a broader enterprise, then you might have specific requirements you have to meet as a franchise. For instance, Crumbl Franchise insurance has to meet three different criteria. First, franchisees must have $1 million coverage for liability and another $1 million for worker's compensation. Crumbl franchisees also must have $150,000 in business equipment personal property insurance. Fortunately, Crumbl franchisees can get customized policies underwritten by The Hartford through the right channels.

5. Commercial Auto Insurance

If you or any employees drive and operate company-owned vehicles when conducting business, then this insurance can cover matters involving bodily injury or property damage. Personal car insurance won't cover drivers who are involved in accidents while they are driving for work or if they cause an accident while driving a company-owned vehicle.

6. Professional Liability Insurance

Many businesses sell physical items, materials, and products. Others focus more on the services they provide people. If your business is more oriented towards the service side of things, any mistake you make along the way might result in negative consequences for clients. They might decide to sue, and this insurance will protect you from what are known as errors and omissions.

7. Landlords Have Rules of Their Own

If your business has any brick-and-mortar locations that you lease or rent from a property owner or manager, then you might have insurance requirements that are part of your rental agreement. Failing to adhere to them can mean breaching your contract. That can complicate matters when it comes time to renew, but it can also mean court action leading to evictions. Such matters will range anywhere from disruption to your business operations to totally shutting you down for a while.

Protect Your Business Based on Your Industry

Most companies need basic business insurance that covers liability, property, and income. However, based on your industry and locations, you might need to add specific policies that cover particular requirements your company faces. Just keep in mind that all of these policies might have maximum coverage limits that you could hit, so also look into an umbrella policy that kicks in when you hit any maximums along the way.