Even if your business is small, it’s generally recommended that you err on the side of being over-insured. One little gap in coverage can lead to collapse, particularly if you’re the sole owner of your business. If you want to avoid closing for good, the very first step is making sure you have the right amount of business insurance.
How Do You Determine Coverage?
Look at the nature of your daily operations. What kind of business are you? If you have a store or restaurant, there are many opportunities for your employees to be injured, whether it’s a burn in the kitchen or a fall on a recently-mopped floor.
Do you make or manufacture goods for sale? What would happen if your equipment failed, or you were unable to get the materials necessary to create your finished product? Here’s another place where insurance could be the difference between a major loss and a temporary setback.
While it’s crucial to really work to identify every single scenario, which can pose a risk to your business, it’s equally as important to speak to an insurance agent. They’ll be more familiar with the laws where you live, which will tell them where the costliest risks are.
For instance, if your state is known to award large sums of money associated with personal injury, this may be a great indicator of what areas of your business should be thoroughly covered.
General Liability Insurance
Most experienced business owners will tell you that general liability insurance is the standard, and they’re not wrong. In fact, it’s often bundled with any property insurance you need, creating a neat package that’s a great insurance starter pack for businesses big and small.
General liability insurance covers a lot of bases. First, it tackles medical bills and most claims of injury. It’ll insure you against property damage, whether it’s your property that was damaged, or if your business operations somehow damaged someone else’s property.
For example, if you have a landscaping business, and a tree falls on a client’s roof, adequate insurance would obviously be a great way to smooth things over.
It can even cover instances where your businesses reputation is attacked, whether through libelous claims or accusations of false advertising.
It’s easy to get covered, as you can even find such business liability insurance online. Still, take the time to read that fine print, compare it to cases that are common in your state, and ensure that the policy provides adequate coverage. Even a policy worth $500,000 can find you going broke, if a suing party is granted $500,000 – plus a crazy amount of legal fees. Many businesses opt for some kind of umbrella policy in addition to their general, just to get more peace of mind from their policy.
General liability may be a great place to start, but you don’t necessarily have to stop there. Ask your agent if other policies for auto, home-based businesses, or more apply to your situation. Remember, everything you worked so hard for can be gone in the blink of an eye – unless you’ve dedicated yourself to stellar insurance coverage.
FYI: I worked at a dead end cubicle job from 2005-2011 for about $30,000 per year. I went self-employed in July 2011 and make between $70,000-$90,000 through blogging, professional pet sitting, hubby's reffing, and our rental home. If you’d like to start your own site (link to my free step-by-step guide), I highly suggest checking out Bluehost (my referral link with a nice discount for you, PLUS a free custom header banner from me!). Please contact me any time at budgetingfunstuff*at*gmail*dot*com with questions or just to brainstorm! I’d love to help!