 What to Buy
Be a Smart Shopper
You may be a small business, but you are big enough to need business insurance. While the thought of having to put out several hundred dollars or more in premiums a year may seem onerous, if anything should happen and you're without coverage, your new venture could be history. Furthermore, you might also set yourself up for legal problems. Some states require insurance for certain types of businesses.
If you're not sure what's required by law, get in touch with your state insurance office or your industry association. Perhaps even a municipal or county clerk's office can provide guidance.
You'll need to research what kinds of insurance are most appropriate for you and your type of business, given the potential risks you face.
Look for an insurance agent that has experience with small business insurance and with your type of company. You can get agent recommendations from other small business owners, the local Chamber of Commerce, or ask your accountant or lawyer.
You can buy an all-purpose package, called a Business Owner's Policy. Expect to pay $500-$1,000 a year and beyond. What will you get? Typically such packages include major property loss, business interruption and liability risks. You can of course, get a customized package with add-ons and riders to meet your specific needs. Then too, you can also buy each of the three major types separately and there are a variety of other policies that may be appropriate for you. Here's a look at some of your options.
Property — This will cover your tangible assets, such as furnishings, machines, and the building, from losses such as fire and smoke, or theft for example.
Business Interruption — If your business is destroyed by earthquake, tornado or some other disaster, your lost income and any expenses incurred to keep your business going during rebuilding or repairing are covered.
Liability — With general liability insurance, you're covered if people are injured or harmed on your property, or if your products and services harm someone, or if you or your employees do or don't something that causes harm.
Product Liability — If you manufacture, sell or distribute a product that could cause injury to someone, you need product liability insurance.
Auto — If your employees will be driving company owned vehicles, you'll want auto insurance for protection against any damages or injuries they cause.
Read the fine print and ask questions. You want to know what specifically is covered and what isn't. Are you guaranteed the full replacement costs? When must you renew and what can you expect in terms of premium increases? Be sure your insurance company is financially healthy, you don't want to find them out of business by the time you come calling for help.
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The "New Business" section is not intended to replace
legal or accounting services. If legal, accounting, or other professional
assistance is required, the service of an attorney or certified public
accountant should be sought.
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