You own a small business. You know you need insurance. But what specific coverage do you need?
Before you buy insurance, you must ask yourself several key questions to determine the exact coverage your company requires. The answers to these questions will help guide your conversation with your insurance agent to create the ideal insurance portfolio for your business.
Do you have employees?
If you have employees, you will need workers’ compensation insurance. This covers your costs in case of work-related injuries and illnesses. You’ll probably also want to carry Employment Practices Liability Insurance (EPLI), which protects you if you are sued by an employee over harassment or discrimination issues.
Do you own or rent a business space?
If your business has moved beyond the folding-table-in-the-garage phase, you’ll need commercial property insurance to cover the space you use for your operations. This provides coverage for damage to the building that houses your business. Typically, you’ll obtain this coverage as part of a bundle policy known as a Business Owner Policy (BOP), which includes property insurance, general liability insurance, and personal property insurance.
Do you accept credit cards?
In today’s marketplace, few companies don’t conduct some form of business via online payments. While this adds convenience and opportunities, it also opens up your company to risk of cybercrime. Cyber liability insurance provides for costs associated with data breaches.
Do you use commercial vehicles?
Whether you own a fleet of commercial trucks or require employees to use personal vehicles for business trips, you’ll need commercial auto insurance. If you’re a small shop and use your own vehicle for business, consult with your carrier to determine appropriate coverage. Your personal auto policy might not be sufficient.
Do you manufacture a product?
If you distribute products to the public, you need product liability coverage. This is typically included in the general liability policy that you can obtain as part of the BOP package.
Do you have a lot of reserves?
Some small businesses have a stockpile of cash in the bank that is readily available in case of emergencies. Others do not. If you don’t have a lot of reserve cash, an umbrella policy can prove useful in a pinch. This coverage extends your other policies in case a claim exceeds standard policy limits.
Can you afford insurance?
The real question is: Can you afford not to have insurance? The answer is no.
For many small businesses, one natural disaster, one employee accident, or one unhappy customer can prove catastrophic if the proper insurance coverage is not in place. It might be tempting to put your hard-earned funds toward other aspects of growing your business, but those premiums could ultimately save your business from closing. A small investment each year is worth the protection and peace of mind you receive in return.
What’s the next step?
Once you’ve asked these questions to gain a better idea of the coverage you might need, contact your insurance carrier to review your answers. Your agent can provide additional input and help you choose the right policies to keep your company properly protected.