Getting Started with Small Business Insurance
Starting a business can be both a scary and an exciting time. Many entrepreneurs put everything they have into the business. In addition to the blood, sweat, and tears it takes to start a company, many individuals put their entire life savings, their house, or other financial assets on the line. This is a big risk, and it’s important to protect that investment with adequate business insurance.
Every small business needs small business insurance. From a small shop in your garage to a local franchise, every business needs to be protected. Depending on the type of business, the size of the business, and the location, there are lots of small business insurance options. However, all businesses should have some combination of these four basic coverage options:
1. Property Insurance: This will protect your physical property, whether that’s computers, office equipment, inventory, or products. If these physical assets are destroyed, property insurance will reimburse you the cost of repair or replacement. This is crucial to a business who is depending on selling that product, or using equipment on a daily basis.
2. Liability Insurance: This protects you against any situation where you may be found liable. This could happen if you or your product injures another person. Any small business runs the risk of being sued, and if you find yourself in a lawsuit with someone who has deeper pockets than you do, your business may be closing before it even starts. Liability insurance is recommended as part of any small business insurance policy.
3. Worker's Compensation Insurance: Once you bring employees into the mix, you must have worker’s compensation insurance to cover your employees if they are injured on the job. This is often required as soon as you hire outside employees. If the only one working in the business is yourself, this may not be required.
4. Commercial Auto Insurance: A commercial auto policy is necessary for any driver operating under the business name. Many small business owners take their own personal vehicle, or use a family van to make deliveries for their business. This is not recommended. If you are in an auto accident, your auto insurance policy may deny the claim if you were working for a company at the time of the accident. For this reason, it is important that any vehicle you use during company time is insured through the company.
Shopping around for small business insurance is the best way to get the best price on the coverage you need. A package business insurance policy such as a Business Owner's Policy (BOP) is generally a great starting point to package all of the above policies together into a comprehensive plan.
Work closely with your business insurance agent so they understand the ins and outs of your business and how best to protect it. As your business grows, keep your insurance agent in the loop of any and all changes so they can help with new savings options or opportunities.