The Basics of Small Business Insurance

March 15, 2013

When you’re just starting a small business, it’s easy to get caught up in the excitement of it all, and being the proud new owner of a business invokes feelings are reminiscent of youth: you may feel invincible and as though nothing could go wrong.


Unfortunately, things can quickly go wrong. Whether you’ve just launched a small business or have been a small business owner for years, having the right protection is extremely important and is an investment in your business.

The obvious reasons for carrying insurance policies are simple; you’re carrying insurance for protection against possible future loss. There are a few kinds of insurance small businesses should look into, and there are some policies a business must carry by law. Typically insurance companies will work with individual needs to create a package specific to your business, although there are some general policies all businesses should consider.

Most business owners first think of liability insurance, which is protection for you against legal responsibilities arising from injuries or damages that occur on your business’ premises or protect from damages that are a result of your business’s product or service. There are a couple different kinds of liability insurance you may need, such as employer’s liability insurance, which you’re required to carry by law if you employ more than one person. This provides coverage for expenses or legal fees arising if your employee is injured or becomes ill due to your fault.

We’ve all heard it: “Early to bed, early to rise…” as a small business owner, that practice is hopefully making you healthy, wealthy and wise, but what if something happened to you and you couldn’t work? Obtaining disability insurance allows you to earn an income in the event of an accident or illness preventing you from operating like normal. If you have a partner or other employee considered a ‘key man,’ you can also take out key man insurance to cover loss if you lost that person to death or critical injury.

You can also buy business interruption insurance which provides coverage if a disaster or other continuity arrangement happened.

No matter what kind of business you own, you also need coverage for the business’s property, so you should consider business content insurance and coverage for property and buildings. Property and buildings coverage protects you from loss that arises from things like fire, riot, storms, lightning and other specified perils. Like a homeowner’s policy, coverage for dwellings are separate from contents coverage, so make sure your business’s content and/or inventory is protected. If you own vehicles used for business, you’ll also need commercial vehicle insurance, also required by law.

Another important type of small business insurance is professional indemnity insurance, covering claims and legal costs incurred because of a mistake your business made, also commonly referred to as errors and omissions insurance.

To find out more about the kind of insurance coverage your small business needs, talk to a licensed insurance agent at Dave Terpening Insurance Agency, Inc. and make the most important business investment possible.

Call us at 1-800-585-1776 for assistance with your small business insurance requirements. We have helped all kinds of clients ranging from restaurants to CPA firms.

Post author Loren Pleet