Tips on Insuring a Small Business

For those who dream of owning their own small business, finally achieving that goal often takes a lot of hard work and sacrifice to get the financing in place. Once the business has started, the owner’s focus is often on getting things running successfully. If disaster should strike, will the business survive or become a casualty? Having the proper insurance to cover the business can mean the difference between surviving and letting the dream die.

Many small business owners are good at the creative part of running the company but may not fully understand the coverage they need to protect their interests. There are a number of areas that need to be considered to provide proper insurance.

The right agent – Finding someone that can be trusted and will not try to take advantage of a situation is extremely important. Independent agents offer the best choice because they provide policies from several companies. They receive a commission based on policies they sell, so be aware some agents may try to push a particular company’s policy because it costs more. Other agents work for one company so policies only from that carrier are available.

The right policy – Choosing the right insurance policy largely depends on how much profit the business is making. For those under about $3 million, a business owner’s policy will likely be enough. It bundles together several policies that are helpful to a small business. For those making more than $3 million, the policies will need to be bought separately.

Proper protection

If the insurance policies need to be bought separately there are at least four that should be included for every business.

Property insurance – This covers the physical building of the business as well as equipment. The material the building is made of, the age and its location to the fire department will determine the rate.

Workers compensation – Required by state laws, workers compensation covers employees’ medical expenses, disability pay and death benefits. Rates will vary based on the type of industry and occupations being covered.

General liability – If the business harms someone else, it will need general liability to cover those expenses. This insurance also covers other people’s property and reputation. Rates will be determined by revenue, customer base and size of the offices. Basic packages will cover up to $1 million, but umbrella policies can be added inexpensively for additional protection.

Business interruption – If an accident occurs at the business that suspends operations, this insurance will help pay for lost sales, rent and payroll. It will also help pay the rent at temporary offices or for equipment if needed.

While some businesses may require additional coverage policies, the ones listed above are a good start for most owners. It can be a fine line between getting enough protection without paying too much. With a little research and the right agent the small business will be able to thrive even if there is an emergency.

Guest blogger Christina Lloyd runs her own small business and thinks it should be a priority for every business owner to make sure they have adequate insurance cover. Christina writes for a site that provides info on all types of educational grants, including student grants for women who are thinking of going back to school.