Small Businesses and Business Insurance
Business insurance protects you from the unexpected costs of running a business. Accidents, natural disasters, and lawsuits could run you out of business if you’re not protected with the right insurance.
Pick the type of business insurance you need
The protections you get from choosing a business structure like an LLC or a corporation typically only protect your personal property from lawsuits, and even that protection is limited.
Business insurance can fill in the gaps to make sure both your personal assets and your business assets are fully protected from unexpected catastrophes.
In some instances, you might be legally required to purchase certain types of business insurance.
The federal government requires every business with employees to have workers’ compensation, unemployment, and disability insurance.
Some states also require additional insurance. Laws requiring insurance vary by state, so visit your state’s website to find out the requirements for your business.
Six common types of business insurance
After you purchase insurance that’s required by law, you can find insurance to cover any other business risk. As a general rule, you should insure against things you wouldn’t be able to pay for on your own.
Speak to insurance agents to find out what kinds of coverage makes sense for your business, and compare terms and prices to find the best deal for you. Here are six common kinds of business insurance to look for.
|Insurance type||Who it’s for||What it does|
|General liability insurance||Any business.||This coverage protects against financial loss as the result of bodily injury, property damage, medical expenses, libel, slander, defending lawsuits, and settlement bonds or judgments.|
|Product liability insurance||Businesses that manufacture, wholesale, distribute, and retail a product.||This coverage protects against financial loss as a result of a defective product that causes injury or bodily harm.|
|Professional liability insurance||Businesses that provide services to customers.||This coverage protects against financial loss as a result of malpractice, errors, and negligence.|
|Commercial property insurance||Businesses with a significant amount of property and physical assets.||This coverage protects your business against loss and damage of company property due to a wide variety of events such as fire, smoke, wind and hail storms, civil disobedience and vandalism.|
|Home-based business insurance||Businesses that are run out of the owner’s personal home.||Coverage that’s added to homeowner’s insurance as a rider can offer protection for a small amount of business equipment and liability coverage for third-party injuries.|
|Business owner’s policy||Most small business owners, but especially home-based business owners.||A business owner’s policy is an insurance package that combines all of the typical coverage options into one bundle. They simplify the insurance buying process and can save you money.|
Four steps to buy business insurance
Assess your risks.
Think about what kind of accidents, natural disasters, or lawsuits could damage your business. If you need help, the National Federation of Independent Businesses (NFIB) provides information for choosing insurance to help you assess your risks and to make sure you’ve insured every aspect of your business.
Find a reputable licensed agent.
Commercial insurance agents can help you find policies that match your business needs. They receive commissions from insurance companies when they sell policies, so it’s important to find a licensed agent that’s interested in your needs as much as his/her own.
Prices and benefits can vary significantly. You should compare rates, terms, and benefits for insurance offers from several different agents.
Re-assess every year.
As your business grows, so do your liabilities. If you have purchased or replaced equipment or expanded operations, you should contact your insurance agent to discuss changes in your business and how they affect your coverage.
We are here to help
CMR & Associates’ risk management consultants provide independent insurance advice by reviewing your current plans to improve coverage and reduce cost. Through CMR’s proprietary database – The CMR Database® (comprised of some 13,000 brokers and specialists globally), we maximize access to the insurance and retirement industry for greater options that will translate to better coverage and lower cost.
Please email CMR & Associates or call 877-447-4301 or 212-447-4300 for more information.