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Insuring your small business

Date posted:  10/27/15 09:00:00 AM Insuring your small business

If you recently decided to open a small business, there are a number of factors to consider and steps to take to ensure optimal success. One of the most critical to-do items is to sign up for business insurance.

Follow these tips when researching and choosing an insurance policy for your small business:

Assess your risk
POMS & Associates indicated you will want to first determine the threats that may impact your operation. This will help you decide how much and what type of insurance to invest in. 

You should also implement proper risk management to minimize the likelihood of issues arising. 

Invest in property insurance 
According to Entrepreneur, knowing what type of insurance coverage you need and what is available is critical for deciding the best policy. While there are differences between the types of insurance certain businesses might have, most operations will need property insurance.

Property insurance will cover costs associated with damage to the property you use for your business. However, simply signing up for property insurance is not enough; you should also check what is included in the coverage. Oftentimes, damage caused by natural causes, such as earthquakes and flooding, will need to be covered by separate insurance policies, so it is critical to fully understand your current coverage. 

Understand other types of business insurance
The Small Business Association indicated there are several types of insurance available for businesses. Becoming familiar with all of the available options will make the decision easier.

Insurance types include: 

  • General liability insurance
  • Professional liability insurance
  • Product liability insurance 

Each type of coverage caters to the needs of each unique business. If you sell retail products that may pose a safety concern for consumers, product liability may be necessary. 

In addition, if your business requires employees to drive company vehicles, you'll want to ensure you have coverage in case of an accident or collision. 

Business interruption insurance 
Another issue many business owners face after tragedy strikes is a loss of profit due to the inability to operate. If the building you work in burns or floods, you will not only need to pay for the damages, but you will also need to account for the loss of profit. When you aren't conducting business as you normally would, you run the risk of losing opportunities or damaging relationships with your clients and partners. 

Business interruption insurance will offer some protection against this, as it will cover bills, payroll and any forecast profit. 

Familiarize yourself with workers' compensation 
If your employees are hurt on the job, you may be responsible for the medical and financial needs that result from their injuries. Workers' compensation offers insurance coverage to these employees, noted Forbes. 

Workers' compensation coverage allows you to avoid legal issues that may arise if you cannot offer these benefits to your employees. In addition, all states require it, but each state has its own law pertaining to workers' compensation. 

Health insurance for employees 
You may be required by law to provide health insurance for your employees. Many options are available and you can find a policy that matches your business's unique needs. 

Small businesses typically are not required to offer it because the cost is so high. However, employee retention will likely improve if the staff is adequately supported with healthcare insurance.

Understand local laws 
When you open your own business, you'll need to become familiar with the insurance requirements for your state. Your insurance provider should be able to provide valuable advice and information regarding local laws. 

Increase your coverage while you grow 
While you expand your business, you will also want to adjust the insurance coverage you currently have. Business insurance is not a one-time decision and one-time purchase. Constantly adapt to your changing needs as your operation develops. 

Work closely with an insurance provider to ensure you continue to invest in proper coverage for your changing needs. 

Shop around 
When you are looking for an insurance policy for your small business, make sure you shop around to find the best deal available. While optimal coverage is key, you also want to make sure you pay the appropriate price for the coverage you wind up with. Don't settle for the first quote you receive. 

Starting your own small business is quite a bit of work. However, with the right idea and proper resources, you can better ensure success. Reach out to a few insurance providers and find the policy that fits your business.