What Kind of Insurance Does Your Small Business Need?
A Home Business Article Contributed by Elizabeth Fox-Wise
Judgmente are Many Kinds of Insurance, but Which Does Your Small Business Need?
Many small business owners do not know which kind of insurance they really need to carry. Since most small businesses can not afford to pay for that which is not absolutely necessary, they often choose to go without any insurance at all. Making the decision to forego insurance may be alright, as long as you understand the risks that your small business is at when insurance is not carried.
There are many types of insurance, and which one(s) are most important for your small business will depend on the nature of the business. The most common insurance types needed by small business will include liability insurance, property insurance, health insurance and/or life insurance. However, there are other types of insurance beyond these which may be advisable for some industries.
Most Small Business Should Carry Liability Insurance
Perhaps the most common mistake made by small business owners is to not carry liability insurance. You may think that your small business has so few assets that a law suit would not be much of a threat; however, there are a couple of things wrong with this way of thinking. First of all, if your small business is a sole proprietorship or a partnership, a lawsuit against your small business could result in a court judgment against your personal assets.
In addition, you will end up spending thousands of dollars in attorney fees to represent you in the law suit. If your small business is carrying liability insurance, the insurance company will provide an attorney at their expense.
There are three types of Liability Insurance. General Liability judgment will cover you in the event of personal injury or property damage to others. Professional liability is good for small businesses that provide a service and it covers for negligence and malpractice. Product Liability Insurance will cover the small business which makes or sells a product in the event a customer gets injured using your product.
Other Types of Insurance Your Small Business Might Need
Some small business owners may wish to carry property insurance. This will cover the building that houses your business and the contents of the business. This is much like carrying homeowners insurance on your home.
Workers Compensation insurance might be necessary for your small business to carry if you employ workers. This insurance will provide coverage for them if they get injured while working for you.
Key Man Insurance might need to be carried by some small businesses. If your small business is financed, the lender might require that you carry Key Man Insurance. This insurance provides coverage for key people in the small business incase they become incapacitated. The lender might require this to ensure that if you can not work the business he still gets his loan payment.
There are other less common insurance plans that are often used by particular industries to the nature of and the risk of their work. You should investigate any industry related insurance recommendations. Understand the risks of operating your small business without them and then decide which are most important, if any, for you.
