What You Need to Know About Small Business Insurance

Every small business needs to consider whether having insurance is right for them, whether you're running a small company with a handful of employees, or just starting a business out of your home. Small business insurance can protect you if your product fails, if someone is injured on your property, or to protect your assets while you rebuild in the event of a disaster.

Knowing what to choose for small business insurance can be confusing and daunting. Most small businesses are under-insured or not insured at all. There are several different policies that you may want to consider, starting with liability insurance. However, what kind of business you are running as well as the size, the product or service will determine what policies you need. With a little research and understanding of the different policies, you'll be able to make educated choices for your businesses' needs.

Types of Small Business Insurance

  • Public Liability Insurance. This is a good basic policy for every business to have. This insurance protects your business if the customer is harmed by using your product or is injured on your premises. It also covers legal defense costs and will cover your business if the court awards money to the injured party.
  • Workman's Compensation/Employment Insurance. If you plan to have employees working at your business, this is a policy you will have to have by law. Employment insurance protects employees and/or contractors from injury.
  • Insurance Over Premises. If you own/lease a building for your business, this is a policy for you. This insurance protects a business by helping you to rebuild or replace contents in the event of a disaster, such as fire, storm damage or theft. 
  • Business Interruption. Pays the taxes, fees, utilities and other continuing expenses occurred while you're rebuilding your company after a disaster. If your building is destroyed in a fire, you can rest assured knowing you'll be able to make important payments that could otherwise end your business career.
  • Professional Indemnity Insurance. This insurance protects you from liability if you offer advice to a client and that client sues you over the advice given. For example, an accountant might want this insurance. It covers legal fees, court fees and provides monetary pay-outs if you are found liable.
  • Non-export Machine Insurance. This insurance protects your machines or other equipment used by your business in the event of damage.
  • Automobile. If your business uses a vehicle, you'll need to insure it. This policy will cover business liability for damage caused when the automobile is used for business purposes.

Keeping Business Insurance Premiums Low

There are several ways to keep premiums low. First, if you can remain risk-free and not use your insurance, you'll be rewarded with lower premiums. Other ways to reduce your premiums include:

  • Look for packages that bundle insurance policies together to save you money. The package will include a variety of insurance policies and limitations/pay-outs based on basic needs. For example, a culinary business might need insurance to replace the contents of a refrigerator in the event of malfunction. Just make sure you understand your policy, that the coverage is ample for your needs, and that you understand the limitations.
  • Shop around to look for the best prices with the best coverage. Cheapest isn't always best if the low price compromises your coverage.
  • Finally, ask about payment options that suit your business. Pay-by-the-month may be better for your business, while other businesses might be able to save more money with an annual payment.

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