What Insurance Does Your Business Need?  

Industry experts estimate that 80 percent of small businesses have less than adequate insurance. There are many different policies out there and you need to understand which are necessary to protect your business. There no point in putting in 60 to 80 hours a week only to have it all go down the tubes because you neglected to purchase adequate insurance.



Insurance is not only going to be important to you, but it will affect your other business relationships. For example, if you lease your office space, the landlord will typically require that you furnish a certificate of insurance or be listed as an additional insured on your policy. This policy functions as assurance to your landlord that your business will not disappear overnight in the event a loss occurs.

Your insurance needs will of course be partly dependent on the type of business you operate. However, insurance advisors recommend at a minimum you purchase the following two types. If you have employees you may also have to participate in a worker compensation plan.

Protect Yourself Against Disasters or Lawsuits

First you should consider business property insurance to cover your assets against potential losses that result from natural and man-made causes. Check your policy carefully to determine what assets and events it covers. You may want to purchase a rider (additional coverage not standard for the policy) for any other coverage you feel is necessary. If you own your building you want to cover it and its contents (e.g., furniture, office equipment, inventory, and supplies). If you lease space, you may still want to purchase property insurance. Your landlord’s building insurance will not cover the cost of your office contents if something should happen.

Second, you may also need liability coverage to protect against lawsuits. Your customers may claim that your services or products have caused injury to them or their property. You will need liability insurance to pay the cost of these damages, and the associated attorney fees and costs. A similar type of liability protection for professionals whose product is a service is called Errors & Omissions insurance. 

Third, if you have employees, your state may require you to purchase workers’ compensation insurance. Workers’ comp (this is how most people refer to it) covers medical expenses and at least a portion of lost wages for employees injured or taken ill as a result of their employment. Your state’s laws determine whether you must provide this insurance. Generally it depends on how many employees you have. Plus there are certain sorts of employees (e.g., independent contractors) that you may exclude from worker’s comp coverage. Also, if you have employees you will be required to pay unemployment insurance.

Get A Quick Primer on Business Insurance Your Small Business May Need!

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This entry was posted on Wednesday, February 27th, 2008 at 4:02 am and is filed under Commercial Insurance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.