When you're starting a business, understanding your insurance for a small business options can be an overwhelming task. What's essential? What can you go without? To make matters worse, you may be pitched by insurance agents on coverage you may not really need, but at a minimum there are three kinds of commercial insurance every business owner should have: small business liability insurance, property insurance and workers compensation insurance.
Small Business Liability Insurance
Liability insurance protects your business assets in the event your business is sued for wrongdoing, like injury or property damage, whether the business is at fault or not. General liability insurance may be purchased by itself or a part of a business owner's policy (BOP) which combines liability and property insurance into a single policy.
If you choose to include liability insurance in your BOP, make sure you understand the coverage limits-they may not be high enough and you'll be better off purchasing a separate liability policy. How much coverage you purchase will depend upon the risks associated with your line of business and the state in which your business operates.
General liability insurance pays the legal costs of any liability claim the policy covers. These may include bodily or personal injury, property damage and damage resulting from false advertising. General liability insurance also covers compensatory and general damages arising from the lawsuit, and typically has a maximum payout per incident.
Umbrella Liability Insurance
Umbrella liability insurance picks up where your general liability coverage ends. If you exceed the policy limit for your general liability insurance, the umbrella policy provides additional coverage.
Property Insurance
Property insurance protects the physical assets of your business, including your inventory, your equipment and the building in which your business is located. Property insurance covers damages incurred from theft, fire and accidents.
The value of your of inventory and equipment will determine how much coverage you need to purchase. Be wise about what you choose to include in your property valuation: higher valuations equal higher premiums and some items may not be worth covering.
In addition to a general property insurance policy, you might also want to consider areas of additional property coverage that may not be included in your standard policy but can be added for an additional cost. These kinds of coverage include data and computer virus protection and, if you travel with your products or equipment regularly, coverage that protects your equipment anywhere you're doing business.
Your line of business and where you operate may lead you to examine even risk-based property insurance. If you run a restaurant, for example, you may want to purchase additional fire coverage. Will you pay more? Yes, but you can negotiate the better premiums by making sure that you're also doing everything you can to minimize those risks-just like your auto insurance discounts you for anti-theft devices, passive restraint systems and safe driving.
Workers Compensation Insurance
In all US states except Texas, employers are legally required to purchase workers compensation insurance. Workers compensation insurance covers the medical expenses and any lost wages for injured employees. How much coverage you need and what it's responsible for paying varies from state to state.
Workers compensation is no-fault, meaning that benefits are provided regardless of who's responsible for injury in the workplace although there may be exceptions for reckless misconduct, or incidents involving drugs or alcohol. Depending upon which state you're operating in, not all employees qualify for workers compensation. These exceptions might include contractors, consultants, volunteers and part-time employees.
Specialty Insurance
Your business and your business needs will determine whether you want or need specialty business insurance. Examples of specialty business insurance include:
 | You may have to adjust your definition of what affordable health insurance for self-employed means; however, you should be able to find coverage that works for you, even if you keep deductibles high to save on the premium. |
 | Home-based business insurance should be a consideration if you're running a small business out of your hous or your garage. Chances are high that your homeowner's or renter's policy won't cover business operations, leaving your office equipment and inventory stored at home vulnerable to loss. |
 | Don't scrimp on small businesss liability insurance. You'll need this coverage in the event of an accident caused at your place of business or by something you produce. |
Small business insurance actually includes several types of insurance coverages designed to serve the typical needs of the small business owner. Here are some frequently asked questions (FAQs) about small business insurance covers available. |
When you have your own business, you need to protect your business assets against the risk of loss or damage caused by theft, fire, smoke, explosions, storms, flood, earthquake, riots, vandalism and various other unforeseen events. |
