When you start a small business, you need the right level of coverage from the very first day to protect yourself and your assets from the liability that can come with running a company. Business insurance can protect you from losses in the event of a catastrophe or in the event that you’re sued. It can also help you provide your employees with the protections they’re entitled to under state and federal law.
But buying business insurance can feel overwhelming. There are many different types of coverage available to business owners. What policies do you need to buy? Start by assessing your company’s level of risk. Understand your legal obligations so you can buy the worker’s compensation, disability, and unemployment insurance you need to protect your employees’ rights. Shop around with different providers to get the best rates. Don’t be afraid to go beyond general liability coverage, and don’t forget to reassess your risk level every year.
Assess Your Level of Risk
Before you start shopping for business insurance, you need to make an honest assessment of the risk levels your company is facing. Are natural disasters common in your area? You may need coverage to protect against earthquakes, floods, or other natural disasters. You’re definitely pretty much always at risk of fires and acts of God, so you need coverage for that. If you’re selling products or food, you need product liability insurance. If you have employees, you need workers compensation, disability, and unemployment insurance. You may be at risk for cyber attacks. If you’re in an industry that’s vulnerable to professional liability, like construction or healthcare, that’s something to consider, too.
Know Your Legal Obligations
If you run a business that has employees other than yourself, you’re required by law to carry insurance for workers compensation, unemployment, and disability. This coverage ensures that your employees will be able to access their legal rights to workers compensation and disability in the event of an injury at work, or unemployment insurance should they get laid off. Check your state regulations to find out how much coverage you need.
Shop Around
You shouldn’t make any major purchase without shopping around, and buying business insurance is no exception. If you want to buy business insurance that meets all of your needs, you’re going to need to get some quotes. Make sure you give all of the providers you talk to all the same information about your business – things like the size of your company, the assets you want to cover, and the location of your business can make a big difference to your costs.
Once you get your quotes, don’t just automatically buy the cheapest insurance. It might be cheap for a reason – it’s not adequate to meet your needs. Check the coverage limits and deductible before you make a decision. If necessary, use the quotes to make adjustments to your budget or ask insurers about changes you can make to your property that will make it cheaper to insure.
Don’t Stop with General Liability Coverage
General liability coverage for businesses typically includes some property coverage and some coverage against lawsuits. You may need much more coverage than a general liability policy or even a business owner’s policy can offer. A typical small business might have a general liability policy, a commercial auto policy, a product liability policy, and business interruption insurance, for example. If you’re not sure what policies you really need, talk to others in your industry to see what coverage they’re carrying and what risks they feel they’re most likely to face.
Revisit Your Risk Level Yearly
As your business evolves over the years, your risk level is going to change. As your business grows, you’ll add more employees and more property and assets, so you’ll need more coverage for that. If your business downsizes, your risk level might downsize, too, and you’ll need less coverage.
Revisit your company’s risk level assessment yearly. Consider the issues you’ve faced over the previous year when deciding what changes you might need to make to your coverage. Reviewing your risk levels yearly will give you the chance to cancel any coverage you no longer need, as well as check in with your insurer about coverage for all of your equipment and assets – although you should really talk to your insurer about adding assets to your coverage as soon as you acquire them.
Don’t be intimidated by buying business insurance. As long as you take the time to understand your legal obligations and your risks, you’ll be able to find the right coverage for your business. It’s just a matter of shopping around and comparing policies carefully to meet your needs.