In some areas, small businesses have vastly different needs than those of well-established companies and corporations. Still, there are some basic requirements and protections that all businesses need regardless of their size and industry, and having proper insurance protection is one of them.
Which insurance policies and coverage amount that the law requires businesses to have varies by state and by circumstances. But the law aside, many forms of insurance are logistical necessities for a business to survive. Texas business owners need to understand both state laws and geographical factors that create insurance liabilities.
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General Small Business Insurance Needs and Considerations
No matter where you run your business, you should at least consider the more general forms of liability insurance. Businesses large and small and across industries often have the following insurance policies:
- General Liability Insurance– This insurance policy protects your business from third-party bodily injury, property damage, and advertising injury claims. It can help pay for medical expenses, legal fees, and settlements.
- Product Liability Insurance– If a product your business produced or sold causes someone bodily harm or damages their property, and they make a claim against you, product liability insurance can cover your associated legal expenses.
- Professional Liability Insurance– This liability insurance form protects professional workers, such as accountants, lawyers, and healthcare workers, from claims of negligence, inaccurate advice, and misconduct.
- Cyber Liability Insurance– Cyber liability insurance covers damages caused by a data breach or leak involving private client or customer information and data.
Texas Small Business Insurance Needs and Considerations
While there are insurance policies that every business owner should consider to ensure their business’s safety and longevity, local laws and conditions also play a significant role. In addition to the liability coverage discussed above, Texas business owners should investigate their needs for the following insurance policies.
Workers’ Compensation Insurance
Workers’ comp insurance covers the medical fees and salary replacement that one of your employees might need after a work-related injury or illness. In the United States, Texas is the only state where the law doesn’t require businesses to offer workers’ comp insurance, but many companies choose to regardless.
Your decision on whether or not to purchase a workers’ comp insurance policy for your Texas business should rely on a detailed cost-risk analysis. To assess your need for workers’ comp coverage, you can research the frequency of workplace injuries and illnesses in your industry and the average insurance rates for a business of your size, in your industry, and in your region. It can also help to request quotes from several insurance companies to gauge the costs.
While perfectly legal for private businesses in Texas, not having a workers’ compensation policy means you are responsible for expenses stemming from an employee’s workplace injury or illness. You also won’t have the same legal protections as businesses with Texas workers comp insurance.
Commercial Auto Insurance
Commercial auto insurance is an insurance policy that covers the costs and damages of a commercial vehicle. Texas is one of the many U.S. states where the law requires businesses to have bodily injury liability and property damage liability coverage for commercial vehicles. There are different minimum coverage requirements for passenger vehicles, vehicles carrying household goods, and those transporting hazardous materials. You can review the state’s commercial automobile requirements checklist here.
Commercial Property Insurance
Due to its location and geography, Texas regularly faces extreme weather conditions that often damage property, such as hurricanes and tornadoes. Commercial property insurance covers the costs of damages to your establishment, including headquarters, warehouse, offices, etc.
But not all commercial property insurance providers offer coverage for all types of weather-related accidents. When purchasing your insurance policy, make sure it protects against all threats your business faces. For example, some Texas-based commercial property insurance providers don’t offer wind and flood damage coverage with their weather damages plan. If that’s the case, you might need additional insurance policies for this coverage.
Business Interruption Insurance
Should a covered natural disaster force your business to close, a business interruption insurance policy reimburses you for the losses and damages associated with the halted business. Business interruption insurance may also cover closures ordered by civil authorities.
Protecting Your Business from the Unknown
While some insurance policies may feel like unnecessary costs—especially if they aren’t required by law—they could be the only thing standing between your business and bankruptcy should a disaster or accident occur. Remember, investing in the right insurance policies for your business is an investment in its future.