By Anwuli Chukwurah

Five most common types of insurance for a business. Yes, there’s more to insurance than health insurance.

Woolichooks recently got three types of insurance, and I feel like I’ve entered my teenage years as a business owner.  Insurance is something you need to have as another layer of protection. Yes, it may feel like you’re throwing money away into the void. Still, you’ll be glad you have it when those costly, unexpected events happen in your business — an employee gets injured, a client thinks you made an error, or a customer sues you because of your product. Below are the most common types of insurance for a business:

  1. General Liabilities
  2. Workers’ Compensation Insurance
  3. Directors & Officers
  4. Property Insurance
  5. Health Insurance

General Liabilities

General liability insurance covers claims of bodily injury, property damage, and personal injury (like copyright infringement and slander). All businesses should have this insurance as their first policy. If you only have enough money to get one type of insurance, get general liabilities. As you grow, you will continue to add to general liabilities the other types of insurance that make sense for your business.

Workers’ Compensation Insurance

The business will also need workers’ compensation insurance if you have employees. This helps benefit employees who suffer from work-related injuries or illnesses, covering medical expenses and lost wages.

Directors & Officers

Directors & Officers insurance covers the personal assets of company/nonprofit directors and officers if they’re sued for alleged wrongful acts during their board service. All my nonprofit clients have this insurance as a standard yearly cost.

Property Insurance

Property insurance protects your business’s physical assets, such as buildings, equipment, and inventory, from fire, theft, or natural disasters. So, this protects everything in your balance sheet’s current and fixed assets section.

Health Insurance

Health Insurance allows the business to provide the employees with medical, dental, and vision insurance as a benefit of working at the company. It’s always great to provide this benefit as the business grows. I’ll write a deeper post about health insurance in the future as this is an actual benefit that employees can enroll in instead of the other types of insurance listed in this post.

Insurance is a way to hedge against potential risks to the business. Some grants, such as government grants, will require specific insurance so the funders can be assured that the business can cover any potential claims. Application for each insurance type will require you to provide information on your financials, employees, and general business info. Insurance can be one of your bigger expense line items, but it’s the fixed cost of doing business.

About the author:

Anwuli Chukwurah is a versatile finance professional with a track record of starting new finance organizations and scaling them for growth in fast-paced entrepreneurial environments. She has over 6+ years of experience working with small business owners, startups, and nonprofit organizations to help connect finance with their business goals. She aims to ensure her clients become comfortable and adept at navigating their numbers. She works with clients at Woolichooks and writes a newsletter for non-finance folks.

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