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How Much Insurance Does My Business Need?

Every business, large or small, should have insurance in case something goes wrong, but just how much coverage does your business need?

Insurance is a must for any business, no matter the size, but the amount and type of insurance will vary depending on your company. A home business with no employees will need a different kind of coverage than a larger one with 100 employees, so make sure you know which is right for your business type.

Your insurance company should be able to help you decide just what kind of coverage and how much, you will need, but it’s a good idea to have an understanding before you start shopping around. Educate yourself, then start looking for insurance providers.

Types of Business Insurance

You will need to choose more than one type of insurance, according to your business needs. In some cases, your insurance company may package several kinds of coverage under one business package and this may be cheaper, so make sure you ask before buying each one separately.

Workers’ Compensation: This covers you for any injuries incurred by employees while working for you. It doesn’t matter if you are not the responsible party, the employee is still eligible for compensation in many cases. This type of insurance will cover things like lost wages for time away from work, loss of limbs, diseases that occurred as a result of the job and death, among other things. If you have an employee, you should consider this insurance.

Property: Property insurance is very important as it protects both the place of business and the equipment you need for your business. In some cases, it will also protect client property if it is in your possession at the time of theft or damage. You can often add specific types of insurance, such as flood or fire.

Casualty: This type of insurance helps to protect you in case of injury or damage to business property. It is often combined with property insurance and the two are quite similar.

Liability: In case of negligence by your company or by one of its employees, where someone else is harmed, liability insurance covers the mistake. In short, if the company is sued for negligence, this insurance coverage will protect it. There are several types of liability insurance; most of them are packaged under one name.

Commercial Auto: Since your regular car insurance doesn’t cover company vehicles, it’s very important that you insure your business vehicle correctly.

Health: Not all companies offer health insurance and while it is not mandatory in most places, you may wish to include it as a bonus for employees. A good health plan can keep employees around longer and helps when you want to hire someone who is debating more than one choice in jobs.

Life and Disability: If one of the main people in the business were to die or become injured, this could have serious repercussions for the company. To help prevent this potential issue, life and disability insurance is useful.

Unemployment: This type of insurance isn’t always required, so check with your state’s laws before looking into this. It is meant to help out employees who have been laid off.

How Much Coverage is Required?

The amount of coverage you opt for will depend on a few different factors. First, the size of your business is important. If you have just a handful of employees, you may not want to offer health insurance, for example. Anyone running their business on their own will not need any of the employee related insurance types.

When it comes to liability insurance, consider how much contact you have with clients. A store or theme park would need some heavy liability insurance against potential client injury, but a home based writing business wouldn’t require anything, as there is no direct contact with the customers.

Finally, the cost is a very big deciding factor. Like other types of insurance, business insurance allows you to adjust what you pay on a monthly or annual basis, according to how much you want to pay out in deductibles before the insurance kicks in. This will depend on your budget mostly, but is also affected by your business needs. In some cases, you may not require flood insurance, for example, so you could eliminate this from the property insurance and reduce your premiums. Take a close look at which types of coverage you really need.

The best thing to do, once you have familiarized yourself with the various types of business insurance available, is talk to your insurance agent. She will be able to guide you toward the right business package for your company and help you decide which types of insurance you need. Price several different packages through different insurance companies to find the best deal. You can save quite a bit of money by shopping around.

Starting a Business?
Join Docstoc's 100% Free Quick-Launch Guide to Starting a Business! Curated Exclusively by the Editors of Docstoc