On the surface, it is quite obvious to most entrepreneurs that they need business insurance. After all, it is the best way to protect assets against natural disasters, personal injuries, theft and even unintended mistakes. However, things start to get a lot more ambiguous when you begin to ask yourself exactly what type of coverage to get for a particular business as well as how much to purchase. Read on with your business in mind to get some clues.
Types Of Insurance
There are several varieties of coverage, each of which pertains to different things. They are:
- Workers’ Compensation. This protects you by paying for the costs associated with any injuries to your employees that happen while they are working for you, whether they are your fault or not. This covers lost wages during a person’s recovery, injuries, disease and even death. If your business has employees, it is advisable to invest in this coverage.
- Property insurance. This covers your workplace and the equipment contained there. If property belonging to a client is damaged or stolen from your place of business, it is often also covered. Because it is not always contained in the basic policy, you can add protection from fire and flood as well.
- Casualty. Often associated with property insurance, this protects you against injury that happens on your property or damage that might occur to your workplace.
- Liability. This covers you in case you or an employee make a mistake that resulted in harm to someone else. If you are sued for negligence, this policy will protect you.
- Commercial automobile. Your company vehicles are not covered under your personal car insurance. Therefore, it is very important that you purchase this separate policy if you have company vehicles.
- Health insurance. Not all employers provide this. However, if you have the resources to offer it, health insurance can function as a strong incentive to attract good employees and keep them around for longer.
- Life and disability insurance. This protects you if one of the primary leaders of the business were to become seriously ill or injured or die. This coverage helps to provide a financial cushion that can carry a company through the difficult transition period after such an event occurs.
- Unemployment. Whether you need this depends on the state where you live, so check to see if it is relevant to you. If it is, it will help workers whom you have had to lay off.
How Much Coverage To Purchase
Several factors help to determine the extent of the coverage you buy. First, size matters. If your company is very small, you may not need health or unemployment coverage. Another thing to consider is how much direct contact you have with clients. If people are coming onto your premises frequently for business reasons, you definitely need a strong liability package in case of injury. However, if you run a tax preparation service out of your home, for example, this may not be the case. Cost is also a big factor. Determine what you need and what you can do without. When necessary, lower premiums by opting for a package with higher deductibles.
The process of arming yourself with the proper type and amount of business insurance is a complicated one, but you don’t need to go through it alone. Work with your insurance agent, who can often bundle your coverages into one single package to simplify things and to cut costs. Shop around, keeping in mind that there are many available options at a variety of price ranges. Finally, remember that your business insurance policy can evolve according to your needs. Therefore, maintaining an ongoing relationship and communications with your agent can be very helpful. Bearing this advice in mind throughout the lifespan of your company can help to keep you safe from the inevitable unplanned events that are bound to happen.