Business Liability Insurance: It’s Not One Size Fits All - Tips for Choosing the Right Coverage
Starting a small business is not a one size fits all-process. However, one best practice that all small businesses should consider is liability insurance. It’s no surprise that most of the information out there about liability insurance comes directly from insurance providers, so it is important to do extensive research to ensure that you are relying on objective information to make business decisions. The SBA offers a wealth of information on liability insurance for small businesses that can help. Here are a few points to consider as you work to ensure that your business has complete protection:
So, What Is Liability Insurance?
Liability insurance protects you from a variety of legal claims including bodily and personal injury as well as property damage that can occur during day-to-day business operations. If you do not have employees, you may not be required by law to have insurance, but you should still be prepared. A single incident can unravel all of the hard work that you have done to build your business.
What you may not know is that there are different types of business liability insurance for every imaginable risk that your business might encounter. They include:
- General liability Insurance
- Product liability Insurance
- Professional liability Insurance
- Commercial property Insurance
- Home-based business Insurance
Learn more about the different types of business insurance that you can purchase to help minimize risk.
Identifying Additional Risk
Your business may require additional insurance options to cover things like commercial vehicles, property, and medical payments. Speak to an experienced licensed insurance agent to go over the fine details of your business insurance needs on an annual basis. The type of business that you own will largely dictate which type of insurance (and how much) you will need. For example, a florist might not need as much coverage as a Jet Ski-rental company. The perceived risk for the florist is much lower, so they may not need as much coverage.
Does your business utilize expensive machinery, cars, and/or employees? What is involved in your day-to-day operations? No one knows your business as well as you do, so take the time to consider any and all perceived risks and be sure to flag them in the discussion with your insurance agent.
Small business employers are required by law to have certain types of coverage. Each state has its own specific requirements, so it is important to research the laws in your state. The three key insurance requirements typically include:
- Workers' Compensation Insurance
- Unemployment Insurance Tax
- Disability Insurance (in some states)
Here are several additional resources that can help you choose the appropriate insurance for your small business and investigate complaints:
- InsureU for Small Business
- National Association of Insurance Commissioners (NAIC)
- Tips for buying business insurance
What tips can you share from your personal experiences shopping for liability insurance?
Source: Mariama Bramble, a SBA Blog Contibutor