What Kind of Business Insurances Do I Need?
~by Christine Schoaff~
You’ve had a great idea and started your business. Now how do you protect your business, your clients, your employees, and yourself? You need a basic understanding of business appropriate insurances.
Here are five business insurances to consider, and a bonus:
General Liability: As the name suggests, this covers you and your business when business activities cause damage to someone else’s property or injury to someone else.
Property: This will be similar to your home owners insurance, covering replacement or similar costs if equipment, inventory, tools and the like of the business are stolen, damaged or otherwise become unusable. A rider to cover loss of earnings while the property is replaced is often available as well.
Product Liability or Professional Liability/Errors and Omissions: This can help cover you when there is a problem with the products or professional services provided by your business. This is not included in General Liability insurance.
Auto Insurance: There are two types: direct commercial auto insurance for vehicles owned by the business, and “non-owned” auto insurance for vehicles used to conduct business but not owned by the business.
Workers Compensation: When you have employees other than the owners, this is generally required. It is generally regulated by the state. The premium is based on the amount of salaries you expect to pay in the coming year for different categories of activities. For example, office administrative help is different from care givers providing services in a clients home. At the end of each policy year, you will need to provide proof of the amount of salary your company paid in those categories. Tax filings are a reference point. If you had more salaries than the policy originally included, you will be charged an additional premium. This process is called an annual audit.
As a bonus — consider a Surety Bond. This is not an insurance product. Your business would purchase a bond by paying a premium to a company to guarantee that your business fulfills obligations to a customer. In buying bond, your company effectively funds an account in the case it is needed. A bond protects the customer and is payable if your company does not complete a job as specified in a contract with a customer.
Christine Schoaff has been an entrepreneur and intrapreneur in opportunities from startup to mid-size to Fortune 500. She has worked extensively with family-run businesses in a variety of industries.