Insurance protects you from the unanticipated costs of running a small business. Lawsuits, accidents, or natural disasters could negatively impact your business if you’re not covered by the right insurance.
Unfortunately, the safeguards you get from selecting a business structure like a corporation or an LLC usually only protect your personal property from lawsuits, and even that protection can be limited. Small business insurance can bridge the gap to make sure your business assets—and your personal assets—are fully shielded from unexpected catastrophes.
As a small business you may be legally required to carry certain types of business insurance. The U.S. federal government requires every business with employees to have workers’ compensation insurance, unemployment insurance, and disability insurance. And some states require additional insurance. Since these requirements vary by state, be sure to visit your state’s small business resource website to learn the requirements for your business.
What does business insurance cover?
Small business insurance can include a broad range of policies that aim to protect business assets in the event damage claims are made against your company. Usually, most small businesses carry general liability insurance, business property insurance, and if they have employees, workers’ compensation insurance.
Without small business insurance, you risk having to pay the costs of a claim against your company from your own bank account. For example, if a customer trips in your office and suffers an injury, business insurance could help cover the costs if he makes a claim for damages against your business. Without this type of protection, you may need to pay the costs related to this claim from your company and/or personal assets.
What if my business is new and money is tight?
Finding the right coverage is important, especially if you’re just starting a new business. A comprehensive overview of common small business insurance options can help you understand what coverage you may need to help protect your assets.
A very small business, like one operated by only one person out of a home, may not need workers’ compensation coverage, but it often needs more property and liability insurance than is provided in a simple homeowners’ policy.
Will I need supplemental insurance for my business?
Once you buy the insurance that’s required by state and federal regulations, you can research additional types of coverage to further mitigate your risk. As a rule of thumb, you should insure the things you wouldn’t be able to replace on your own.
An insurance agent can discuss the kinds of coverage that make sense for your specific business and help you compare terms and prices to find the best option.