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Business Insurance-What You Need to Know

Over half a million new businesses are started in the U.S. each month. Many of these are small to mid-sized businesses with less than 500 employees. For the business owner, starting a money-making venture is a crowning achievement. Unfortunately, many small businesses fail to accurately assess the risks inherent in starting and running a business. This is where discussion about business insurance come in.


Every business needs insurance coverage. This insurance should cover everything you have in your business, from vehicles to basic liability such as injuries accrued by, requires insurance. Without it, you could put everything you've built in jeopardy, open yourself up to crippling financial issues, or even be in violation of the law. But not to worry, here are some basics about coverage of your business that can help you get the protection you need to succeed.



Types of Business Insurance


The first thing you need to understand about coverage and your business is the different types that exist. Depending on your business, you may need specific kinds of insurance. In general, business coverage can be broken down into three broad categories: insurance for owners or partners and key employees, coverage of business earnings and property, and liability insurance. Here is a breakdown of each different kind.


Insurance for Business Owners, Partners and Key Employees


If you own a business, you need specific types of coverage depending on how your business is set up. These can include, but are not limited to:


Life insurance - This coverage protects your family if something happens to you. If you are the sole proprietor of your business, this insurance is key because business owners are personally liable for all the debts of the business.


Disability insurance - In the event that you are injured or fall ill, disability insurance will provide you with an income for a specified amount of time.


Partnership insurance or buy-sell coverage - If you have a partner in your business, this insurance will help you purchase your partner's shares and continue running the business in the event of their death.


Critical illness insurance - If you become critically ill, this coverage will give you a lump sum of money to help you through the situation.


Key person insurance - This coverage protects you in the event of the death or loss of those employees who are most important to your business.


Insurance for Business and Property Earnings


On top of coverage that protects individuals, your business may also require the following types of insurance to protect its assets and earnings. Bear in mind that businesses run out of your home may require coverage beyond your home insurance. It is always a good idea to contact your coverage company to discuss running a business out of your home.


Property insurance - This coverage covers any buildings or property owned by your business if it suffers damage or destruction from fire, earthquakes, avalanches and other such disasters.


Contents insurance - If you have a property or building that stores things for your business, such as a warehouse or storefront, this policy covers the loss of those contents. Note that even if you are leasing space, you may still require contents insurance as your lease will likely make you responsible for what you put inside the leased space. Home business owners will need to contact their insurance companies to discuss what needs to be included in their home policy.


Business interruption insurance - When disaster strikes, this policy will cover you for the time that your business cannot run at its proper efficiency.


Vehicle insurance - If your company owns vehicles, you are legally required to have coverage. If you use your personal vehicle for your business, make sure that you contact your insurance company.


Liability Insurance


Liability covers you in the event of a mistake or accident for which you can be held responsible. There are three kinds to consider when you own a business: personal liability, product liability, and professional. These cover you from personal responsibility, something going wrong with your products, and from lawsuits filed by your clients, respectively.


Starting your own business is a big risk, but that doesn't mean you should take unnecessary chances. If you own a business, you need the right coverage. Be sure to shop around and find the insurance package that's right for your business. If you have any additional questions, we can help you make sense of your policies to ensure you have the right kinds of coverage from the right kinds of insurance companies.

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