Small Business Insurance Advice
Small business insurance helps protect your business assets and customers. Advice as to adequate insurance amounts and types will depend on your particular business situation, but your state will dictate insurance mandates and will require at least some forms of employee and business liability insurance, especially if you work in proximity with customers or property. Insurance is a necessary cost of doing business and can help inspire confidence in customers and employees.
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Liability Insurance
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Commercial General Liability insurance (CGL) covers your business against bodily injury to others, damage to the property of others, personal injury caused by your business and claims resulting from false or misleading advertising. Since most businesses carry one or more of these risks, you should consider carrying CGL even if your state doesn't require it.
Errors and Omissions Insurance
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Errors and Omissions (O&E) insurance protects your business against claims arising from non-performance of a contracted job or if the job does not meet the expectations of the customer. Types of errors and omissions insurance include malpractice for those in the health care field and professional liability for attorneys and others involved in professional services. Contractors, sales and service businesses or other companies involved in providing verbal or written contract work should consider E&O insurance if not already mandated by your state.
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Property Insurance
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Property insurance for your business protects you from loss or damage to your property and business assets. Ensure that your asset and stock inventories are current, and that you have periodic real estate appraisals to guarantee that your property insurance is adequate to cover losses.
Vehicle Insurance
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Vehicle insurance is mandated in 48 states, and you'll need to make certain that your policy limits are sufficient to cover your assets in case of an accident. Bear in mind that injured parties can sue your business for additional damages if your vehicle policy amounts are not sufficient so talk with your insurance agent to ensure that you are sufficiently covered. If you live in Wisconsin or New Hampshire, you'll need to fill out a financial responsibility form and provide proof of your ability to pay for damages in lieu of vehicle insurance.
Surety Bonding
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Surety bonds are required of many businesses in the construction, financial, service and security industries. Bonds are obtained through an insurance agent and required by law for certain businesses. Surety bonds help the customer recoup losses which occur due to negligence, theft, non-performance or non-completion of contracted work. If required, be sure your bonds are current and are obtained for each project and/or employee involved.
Health Insurance
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Offering small business health insurance is not mandated by the federal government but is regulated in all states if you offer it as a benefit. Check with your state's insurance commission to make sure you are in compliance with laws in your area.
State-mandated Employee Insurance
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Most states require businesses to obtain worker's compensation, unemployment and disability insurance. Employee insurance protects employees' well-being and income should an accident or disability occur and is regulated by your state's insurance commission. Not carrying employee insurance can result in lawsuits, fines, penalties or business closure.
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References
Resources
- FOXBusiness: Health Insurance Advice for Entrepreneurs
- WisconsinOfficeoftheCommissionerofInsurance: Insurance For Small Business Owners (PDF)
- SmallBusinessAdministration: Insurance
- Business.gov: Business Insurance
- StateofNewHampshire: Your Guide to Understanding Auto Insurance in the Granite State (PDF)
