Insurance is not a sexy topic for a business owner, but it is necessary to think about. Protecting both your business and yourself should be a top priority as an entrepreneur. When is the last time you looked over your business insurance needs? Have you recently added payroll employees? Moved into professional office space? Or got a contract for a Fortune 100 Company? Let’s first review the different types of business insurance available so that you can figure out what you need to have in your business. After that, we’ll address some insurance questions.

Worker’s Comp

If you have payroll employees, you are required to carry worker’s compensation coverage. How much depends on what your state requirements are and what your employees do. Typically, this type of insurance policy protects your business from having to pay medical expenses and disability payments if an employee is injured on the job.

General Liability

The last thing you want is for a customer to slip on a wet floor and fall, and then sue you. You also don’t want to be doing a contract for a major corporation and something happen to one of your employees on their location. General liability coverage those types of challenges, but it will also pay for theft, fire damage, destruction of property and any medical expenses or settlements in instances like these. You are also required to have a general liability policy if you have an office lease or retail location.

Errors and Omissions

This type of liability insurance is important if you provide professional services or consultation, as it protects you in the case of a civil lawsuit. If a client says you gave him bad advice and he sues you, the insurance will help cover your legal expenses. Some corporate contracts will require this type of insurance so check to ensure you have what you need to be covered.

Key Man Coverage

If something were to happen to you or your business partner, what would happen to the business? Often, major illness or death means the immediate demise of a business, and that’s why key man coverage is so important. It helps companies through the loss of a key member of the executive team. Even if your partner and surviving spouse decides to sell or shut the business down after your death, this policy will provide the funds to pay off debts and pay severance to employees.

Answering Your Business Insurance Questions

I have a home-based business. Do I still need business insurance?

Absolutely. Running a business out of your home doesn’t invalidate it as a business, and you have many of the same risks and liabilities as any other business. Look into a business owner policy, which will protect your home office equipment in case of loss, theft, or damage.At the very least, you need general liability coverage, as well as maybe errors and omissions coverage if you are a service provider.

How much coverage do I need?

The answer is it depends on the type of business. You may be required in certain circumstances to carry a specific amount of coverage, such as if you do business with major corporations. Vendors are typically required to have at least a $2 million liability policy to protect their interests in interacting with your business.

Where should I store insurance documents?

Store insurance documents in a safe place. Small business owners should keep their insurance policy and certificate of insurance in a fireproof safe or safety deposit box at a bank. Doing so will make sure you can contact your insurance provider quickly should you need to file a claim. The  last thing you need is to scramble to find the necessary paperwork in an emergency.

What should I do before applying for business insurance?

Talk to your current home owner’s insurance provider to start, but get three quotes. Review the terms in business contracts with large corporations to see if there are business insurance requirements you must meet. It’s also wise to review your financials and build an equipment list so you can answer questions for an insurance broker who will develop a quote, as well as determine the appropriate amount of coverage.

How much will I pay for business insurance?

That will depend on what kind of coverage you elect, but there are insurance companies that cater to small businesses like Hiscox. A general liability policy for can be as low at $500 a year. Factor this expense into your budget so you can afford it when the annual renewal bill comes due.

How can I save money on business insurance?

There are a few ways to do this. First, shop around to find the best price for the coverage you need. Next, see if the insurer offers discounts for bundled policies. If you plan to buy multiple business policies, you may qualify for a discount for selecting them all from the same insurance company. See if paying for a year’s coverage reduces what you pay versus a monthly payment. Paying more now can save you in the long run, so be smart about it.

You may never need business insurance to do its job, but you’ll kick yourself if you don’t have it and then need it. It’s a worthwhile expense to ensure that you have peace of mind in protecting your family and your business.


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