How To Buy Business Insurance

If you buy all the insurance some insurance companies think you should have, your company would go broke. So it’s important that every business owner has a strong understanding of what insurance his business needs…and what it does not need.

As business owners, we all know the risks—theft, fire, fraud, litigious vendors and customers, natural disasters, and much more. Naturally you need some protection against such dangers. But with limited budgets, it may be prudent to think of those really big disasters that would put us out of business, even if only for a few days.

Here are some coverages you really should have (and probably do), and some you may want to consider adding.

Insurance You Must Have:

Workers’ compensation is a good place to start. The laws in most states require you to have this to cover injuries in the workplace. Typically workers’ comp covers basic medical expenses for the injured worker, lost income and rehab that may be necessary. It could also include a death benefit if that applies. Make sure you’re covered by this insurance, as well. General Liability covers injuries or damage caused to other people or their properties by your company’s actions. If your customers access your premises or if you have a product or service that might result in injury to others, you need this insurance. Typical policies provide a million dollar coverage per claim, though you may want more than that depending upon your circumstances.

Another standard policy is a Business Owner’s Policy (BOP). It’s for companies other than manufacturers and construction firms who need up to $3 million in revenues to provide property and general liability coverage.  Many BOPs also include business interruption coverage, so you’ll want to discuss this with your insurance agent for all the details.

Insurance You Should Have

Actually, the types of policies listed here could be consider “must have’s” as well, especially if your company is fairly mature and growing consistently. Experts usually list business vehicle insurance to cover company-owned vehicles, leases and rentals by employees. Don’t overlook coverage for employees driving company-owned cars and trucks after hours—you’re potentially liable for any damage they cause.

Also recommended is business interruption insurance, covering you against unforeseen but increasingly common disasters like wind storms, floods, fire and more. Even a small fire, for example one that destroys a key computer, could put you out of business for days or weeks. This policy can help protect you against the financial damage that might cause you.

Best idea? Talk To Your Agent

Your insurance agent should be a valued member of your outside consulting team. The better he or she understands your business, the best he can provide you the policies that will protect you. We recommend sitting down with your agent at least twice a year for a review of how well your standard and custom policies are doing the job you need them to do.