As a business owner, you have a lot on your plate. You’re constantly concerned about expenses, customer satisfaction, and ensuring your employees are thriving.
You’ve worked to grow your business and you want to protect your assets, but this doesn’t mean rushing out to hire a security team—instead, it refers to insurance. Business insurance in Illinois can give you some financial protection if something goes wrong. However, there are different types of insurance so how do you know if you have the coverage you need?
We’ll take a look at the different types of insurance for businesses so you’re better equipped to make the right decision.
Is Insurance a Requirement for Illinois Businesses
Before you start calling insurance companies and comparing quotes, it’s a good idea to know the legal requirements. Under Illinois state law, all businesses must carry workers’ compensation insurance—and this isn’t a suggestion, it’s the law if you have employees. However, if you’re a one-man or woman operation, you don’t need to carry workers’ compensation on yourself.
You may also need to carry disability and unemployment insurance. Whether or not it’s a requirement depends on a few factors like pay rate and hours worked. Typically, if you have salaried, full-time employees, you should expect to have both disability and unemployment insurance.
Yes, the premiums can be hefty but it’s less expensive than the fines and other penalties you can face if you don’t have the right type of insurance.
Proving You Have Insurance
Sometimes the state decides to audit a business. Often, there’s no rhyme or reason why a business is picked for an audit. Don’t panic if it happens to your company. Just pull out the required paperwork. You may need to provide a certificate of insurance or COI.
If you don’t have the certificate handy, no worries. The state gives you a grace period to produce the document. Typically, a call to your insurance provider is all it takes to get a COI. Some insurers will even post it on your online account for easy access.
Types of Insurance Available for Illinois Businesses
There’s more than one type of insurance Illinois businesses can carry. You only need one policy or a combination of several. Here’s a closer look at the available options.
BOP Insurance
A common type of insurance for businesses is BOP (Business Owner’s Policy). If you need multiple types of insurance, BOP can make it more affordable and manageable.
BOP combines three types of insurance into one. You get:
- Commercial property insurance: This covers your building and equipment. You’re covered regardless of whether the property is a rental or owned by the business.
- General liability insurance: This is something every business should consider. This type of insurance provides coverage if a customer, visitor, or employee is injured on the property.
- Business income insurance: With this type of insurance, your lost income is covered if your business can’t open due to property damage. For example, if the building is damaged in a storm. Your average daily sales are covered under this type of insurance.
With BOP insurance, you can customize it to fit your unique business needs., which means you can add or delete coverage as your business grows.
Professional Liability Insurance
Even though professional liability insurance isn’t required by law, it’s still something to consider. What does the policy cover? If a customer claims you made a mistake in the services you provide, the insurance helps cover the costs.
This includes your legal expenses, court fees if your case goes to trial, and the settlement/judgment. While you may be on great terms with your customers, mistakes can happen and it’s always a good idea to be financially protected.
Data Breach Insurance
Okay, while this type of insurance isn’t a legal requirement, preventing data breaches is in most industries. If you’re dealing with personal information, you’re legally required to keep it safe. This means preventing hackers and unauthorized users from accessing the stored data.
So, what is protected data? The list is extensive but basically, it’s any identifiable information. For example, a customer’s credit card or bank information. In the health industry, it’s anything that can identify the patient and/or their condition.
While you’re legally required to meet industry cybersecurity protocols, breaches can still occur. If one happens, the costs can be extensive and this is when data breach insurance is helpful. The insurance will:
- Take care of notifying your affected customers
- Provide credit monitoring services
- Pay legal fees and industry fines
The insurance can also help your business respond promptly to the cyberattack to minimize damage and help prevent irreparable harm to your brand.
Flood Insurance
So, you may not think about flood insurance, especially since your business is in the Midwest. After hurricanes and tropical rainstorms aren’t an issue. However, even small creeks can easily overflow their banks and suddenly your business is underwater.
Guess what, your business insurance policies like BOP aren’t going to cover flood damage. Commercial flood insurance is a federal program and there’s a 30-day waiting period before the policy kicks in. If your business is by or in a flood-prone area, this type of insurance may be worth the monthly premiums.
Commercial Auto Insurance
Like flood insurance, this is one that not all Illinois businesses need to carry. However, even if you own one commercial vehicle, you’ll need to have commercial auto insurance. The insurance can also cover any employee-owned vehicles that are used for work. For example, if an employee uses their car to make deliveries.
If the employee is involved in an accident, commercial auto insurance covers all or most medical expenses, including therapy such as rehabilitation—vehicle repairs are also covered. The insurance also pays for a rental vehicle while the original is being repaired.
Having the Right Insurance Makes Good Business Sense
You’ve worked hard to grow your business so it makes sense to protect your investment, which means having the right type of insurance.
While some like workers’ compensation are a legal requirement, others are left up to the business owner’s discretion. Instead of hoping a disaster doesn’t strike, it makes more sense to be prepared.
