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  • Shelly Bell

Five Things You Need to Know About Business Insurance

As most founders find out at the beginning of their entrepreneurial journey, you don’t know what you don’t know! You have to educate yourself about what’s required for your business and that includes the not-so-sexy parts, like business insurance. When starting a small business, entrepreneurs often overlook buying insurance. But when you’re self-employed, insurance offers you protection and peace of mind — and sometimes your clients or partners may require it. For example, if you’re bidding for a local government contract, most municipalities require you to purchase insurance before you provide your service or product. The options can be overwhelming, especially for those who've never purchased coverage before. Here are five tips to keep in mind while shopping for business insurance.

1. If you work from home, your homeowner’s insurance does NOT cover your business.


Most home insurance policies exclude business liabilities. You need to purchase a business insurance policy that includes property and liability coverage. A business owner’s policy (BOP) is typically for businesses that make less than $5M in yearly revenue and have 100 or fewer employees. Not only does this offer property and liability coverage, it includes business interruption insurance, which covers the money you would lose if your home suffers damage and you need to close your business.

2. Know the types of insurance


Before buying insurance, you should have a basic understanding of the four coverages offered: general liability, commercial auto, commercial property, and workers compensation. You may also need other types of coverage, such as errors and omissions liability or a commercial umbrella. It may be helpful to ask other business owners in your industry what insurance coverages they have.

3. Assess your risks.


Running a small business means exposing yourself to a certain amount of risk. Every industry and every individual business within an industry contends with different levels of risk, both in terms of the probability of something happening and the severity of the consequences. Think about what kind of accidents, natural disasters, or lawsuits could damage your business. Be prepared for the unexpected! If you need help, the National Federation of Independent Businesses (NFIB) provides information for choosing insurance to help you assess your risks and to make sure you've insured every aspect of your business.

4. Shop around to find a reputable licensed agent.


Find the best deal and fit for your business because prices and benefits can vary significantly. You should compare rates, terms, and benefits for insurance offers from several different agents. Commercial insurance agents can help you find policies that match your business needs. They receive commissions from insurance companies when they sell policies, so it's important to find a licensed agent that’s interested in your needs as much as his/her own. Don’t be afraid to ask questions!

5. Business insurance can help build credibility


Your business insurance does more than protect your business. It shows your prospective clients and customers that you’re a safe bet. Having the right policies shows your customers and contractors that you take managing risk seriously. It also helps communicate to everyone that you’ll provide the right protection, no matter what accident occurs. Also, many contracts require insurance protection. So, having it already will signal that you are a responsible professional.

If finding and choosing the right business insurance causes you anxiety, don’t let it! Taking these steps now will lessen the real anxiety later if faced with the unexpected. And remember: building a strong foundation for your business, in the beginning, will set you up for long-term success!


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