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Business insurance is a must for those who own their companies.

Dan LaSpina, a commercial insurance broker at Todd Associates Inc. in Beachwood, and Jim Strassman, principal of Strassman Insurance in Richmond Heights, explained business insurance might be one of the more critical policies.

“When I talk to people about business insurance, the most important thing is liability coverage,” Strassman said. “That is where your biggest exposure is. Liability is where you generally have the biggest problems as you can lose a business in an uncovered lawsuit.”

LaSpina said there are many types of business insurance, which depend on the type of business that needs coverage.

“But, it protects the business owner and their company for any claims or lawsuits that can arise due to their negligence or liability,” he stated.

He added some of the more common types are general liability, which involves property damages or injuries; property damage, which covers the physical business; auto insurance, which covers employee drivers and company vehicles; and workers’ compensation.

Another that has grown in relevance is cyber insurance, LaSpina and Strassman said. If a business does any online commerce, like sales or payment processing, it’s smart to get a separate policy focusing on cyber protection.

“In the last couple of years, we’ve been writing a lot of those cyber liability coverage plans,” Strassman said. “These plans can cover a wide variety of things, like hacks and business interruption. There are a lot of different options.”

Strassman added employee coverages from dishonesty to benefits, as well as wrongful termination, dismissal and sexual harassment policies have gained traction.

LaSpina said business insurance encompasses a lot of different categories, especially when it comes to smaller businesses with minimal to no extra staff.

“For instance, I work with a lot of contractors and real estate developers, but for example, with a contractor, he’d have general liability coverage, like for the building and tools,” he explained. “It’s not all-encompassing term and it’s very specific to the industry of whoever is looking for coverage. ... It’s very interchangeable based on a company’s needs.”

Though business insurance isn’t explicitly required by law to operate a business, both of the professionals said it is a very bad idea to run a business without it.

“If (a business owner) doesn’t have the right coverage or they aren’t offered it or they don’t purchase all of the options given, it’ll just cost out of pocket to take care of a claim,” Strassman stated. “That is the problem – it’ll cost you money. You could go years without a problem without insurance, but it only takes one incident to shut down your business.”

Strassman added for businesses run out of a home, don’t assume your home insurance covers the business. It doesn’t, he said.

LaSpina said, “Your business will go under in the event of a decent-sized claim. Some companies will try to get off and running, but all it takes is one claim to bankrupt the company. If they own a building and the building burns down and everything they own is in it, they’re out of luck.”

Both professionals suggested individuals contact a broker to explore their business insurance options.

“You have to pick someone in the insurance business that is an expert and knows that they’re doing in terms of writing business policies,” Strassman said. “You have to vet out what agent you’re going to use so they know the business landscape and options.”

LaSpina added, “When you’re starting a company, put insurance at the top of the list and get it done. It’s one of the things in your business that you can’t hold or touch, but it’ll save you.”

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