You already have at least one kind of insurance. You probably have auto insurance to protect your car and cover your liability if you get into an accident.

You might have home insurance to protect your real estate. You might even have life or other types of insurance to protect yourself financially. All forms of insurance share something in common: They protect your investment and ensure you aren’t ruined in the event of an unexpected twist of fortune.

Protect Your Business

It’s not hard to anticipate an “unexpected turn” like a house fire or an auto accident, but for some reason, many entrepreneurs fail to plan for the bad things that can happen in business, as well. Insurance is necessary to protect you against those unexpected turns.

In fact, there are five major kinds of insurance you should consider getting if you’re a small business owner:

1. Professional liability insurance

Professional liability insurance covers your business against errors, negligence, or malpractice conducted by your business as part of a contract or regular work. For example, if you complete your work in a way that causes damage to another person or business, that person or business could take legal action against you. Liability insurance protects you against such an eventuality.

Of course, avoiding negligence and errors are good ways to prevent such lawsuits from arising, but you can never avoid anything completely. Some businesses, such as medical practitioners, are required by law to hold professional liability insurance.

2. Worker’s compensation

Worker’s comp insurance protects against the costs associated with your employees being injured or disabled while working. For example, if one your workers accidentally cuts himself with a knife in your kitchen, worker’s comp insurance would cover the medical expenses and liabilities related to such an incident.

Laws regarding worker’s compensation vary by state; Texas has no formal requirement for worker’s comp, but all other states require it for a minimum number of employees, usually between three and five. As long as you have any employees, it’s a good idea to have worker’s comp as a precaution, even if it’s not legally required.

3. Property insurance

Commercial property insurance isn’t required by law, but is highly recommended by most insurance professionals and other business owners. It functions like residential homeowner’s insurance: Property insurance will protect your investments in the event of fire, flood, or other destructive calamity.

There are two main types of property insurance you’ll need to consider: peril-specific forms of insurance protect your physical business assets against isolated, specifically named threats (e.g., fire insurance or flood insurance). All-risk policies, on the other hand, cover almost anything that could happen to you.

4. Vehicle insurance

If your company owns at least one vehicle, you’ll need vehicle insurance to cover it in the event of an accident (or possibly, another destructive event). Commercial auto insurance works almost identically to residential consumer auto insurance, so it should be familiar territory. However, depending on who uses the company cars and how they use them, you could wind up paying much higher rates.

5. Business interruption insurance

Business interruption insurance is much like what it sounds like. In rare cases, you’ll find that a specific incident prevents your business from operating to its fullest capacity. For example, a fire might damage your equipment and prevent you from working for several weeks or months.

Business interruption insurance helps you manage this rough patch by supplementing the revenue you would have gained were you still at full operating capacity. There are some industries and businesses that can continue to operate no matter what conditions arise, but the majority of businesses would greatly benefit from interruption insurance under these unfortunate circumstances.

Takeaway

It doesn’t matter how big or how small your company is. If you operate regularly, you need these types of insurance (possibly excepting worker’s comp if you have no employees, or vehicle insurance if you have no company vehicles).

The key point of “unexpected turns” is that they’re always unexpected. Rather than closing your eyes and hoping for the best, secure the above forms of insurance to make certain your business and personal finances are never destroyed by an unfortunate turn of events.