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There are many questions to ask when considering business insurance for your small enterprise. What does business insurance cover? How much do I need? What kind should I get? The answer to all of these questions is, “it depends.†Business insurance is as widely varied as the industries they insure, and there is no one-size-fits-all answer.
What does business insurance cover? Business insurance comes primarily in three forms: general, professional and product. General business insurance protects you from the most common problems one in business might encounter: workplace accidents, property damage, and theft. It is used by nearly every business in the country. Professional business insurance is used by lawyers, engineers, doctors and architects and protects them from malpractice lawsuits and errors and omissions (the latter applies to most professionals and is commonly referred to as E&O insurance). Product liability insurance covers damages that might be incurred from the rightful use of a manufactured product, and is typically only used by factories and manufacturers.
How much do I need? Well, that depends on how much you plan on being sued for. There is really no right or wrong answer to this, and it depends very much on your own personal subjective reasoning. A good rule of thumb is to logically consider what the worst accident that is within the realm of reasonable consideration would be, and insure accordingly. Talk with your insurance providers and try to find a good agent that can give you honest, reasonable expectations about what you should be willing to protect yourself from.
What kind should I get? Selecting an insurer is never something that should be taken lightly. You may want to talk with other owners that are in your industry and find out what they recommend. Insurer that take too long to deliver payments or don’t deliver what they say they will tend to gain bad reputations very quickly. Another excellent source to go to is JD Power & Associates, who log consumer information about insurance products in an easy-to-access fashion. You may also want to consider taking a look at your state’s Department of Insurance website (yes, they have one), which will give you an insight on the credibility and consumer satisfaction level of the insurer in question.
