On top of all of the other things that you need to consider when you begin your business, is whether or not you need to have business insurance. Most all businesses have some risk of liability, and because of this, business insurance should be a priority. As with everything else in your business, insurance for your business is filled with differences, as well as choices, and of course cost.
So what is business insurance? It is your safety net, of sorts. Within the general term of business insurance, there are several kinds of insurance that you would need to consider. The first being Liability insurance, the second being Worker’s Comp insurance, and possibly business auto insurance, errors & omissions/professional liability, and umbrella insurance. Each of these types of policies will cover your business’s liability for different liabilities within your field.
The most common type of insurance is Liability insurance. Often, this type of coverage is written on a policy that also covers any business personal property, such as your computer, and office equipment. The purpose of liability insurance is to cover any losses you may have that damage a person or their property while you are conducting your daily business operations. An example of this would be if you own a small grocery store, and a customer slips and falls on a wet floor. Your liability insurance would cover their medial bills, any physical therapy they may require, and possibly even additional payments for emotional stress. Of course, if you have no contact with your customers, then you may not have a need for this type of insurance. You’d need to speak with a licensed, experienced insurance agent in your area to determine if you need this kind of insurance.
Another important type of insurance is worker’s compensation, which covers any injuries your employees incur while working for you. If you employ a cashier in your grocery store, and she slips and falls on that same wet floor, this policy will cover her medical bills, as well as pay a portion of her income for the time that she is out of work on work related injuries. It is even possible that you would need to have worker’s compensation insurance, even if you don’t employ anyone. Each state has their own regulations, and many enforce the requirement for worker’s compensation insurance on any business that has three or more people working within the company, including any officers, owners, members, etc. Again, you’d need to speak with an agent to determine if this is required for your business.
Other types of insurance include business auto insurance, which is insuring any vehicles you use specifically for your business – such as a truck you use for grocery delivery to your customers. Professional Liability/Errors & Omissions insurance is designed to cover any mistakes you make during within your work. For example, if you are a lawyer and neglect to disclose back taxes owed on a property, your professional liability insurance will cover any costs you incur due to the resulting legal actions. Umbrella insurance for businesses is the same as it is for personal insurance. It is simply an extra layer of liability coverage that will kick into action if your other policies are exhausted. If your legal bills from forgetting to disclose the back taxes exceed your basic policy limit, your umbrella policy would cover the excess.
There are many different types of policies, as you can see, and even more options within each policy, and each company that can greatly benefit your business in the event of a loss. Just like you would insure your life, or your health, you need to insure your business. The idea of insurance is to put you back in the same place you were before the loss occurred. Even if you don’t like paying the premiums, you’ll be glad you did if you ever have to file a claim. So call your agent today!