How do I know if and what type of liability insurance is needed for my business?

How do I know if and what type of liability insurance is needed for my business?

Answer:     Essentially every business needs some amount of property, liability, and vehicle insurance depending upon the business activities and other factors. Business insurance is generally based on the business activities and risks and not whether, for example, it is home-based or located in an outside office. Some small businesses can be insured with addendums or riders to homeowners’ policies or personal supplemental liability policies; others require separate policies in the name of the business. You can contact your insurance agent to determine if your business activities are covered or can be covered under your current policies or if you need separate business policies.

Several factors influence liability, property, vehicle, workers’ compensation, other insurance and bond coverage types, amounts, and premiums, including the types of services, amount of company and/or owner assets, the amount of business sales, number of employees, customer contract requirements, and professional licensing requirements. Even if the business is conducted through a business entity, basic insurance for a business typically includes general liability insurance coverage, property insurance for protection against fire, theft, and other losses, workers’ compensation insurance, business interruption insurance, key person insurance, bonds and other coverage. Also, if a company is providing a professional or business service to clients or customers for a fee, mistakes can be made and the business will have a professional liability or errors and omissions (E&O) exposure. As indicated in the information below, E&O insurance “may be appropriate for anyone who gives advice, makes educated recommendations, designs solutions or represents the needs of others, such as teachers, consultants, software developers, ad copywriters, Web page designers, placement services, telecommunication carriers or inspectors.”

We generally recommend that business owners work with a qualified business insurance broker to assess their insurance coverage. An insurance broker can identify the insurance coverage recommended for your business, customize an insurance package for the business, and obtain competitive premium quotes. Also, an insurance agent can advise you on any unique risks or liabilities related to your specific business. It is often important to work with an independent broker who can shop your insurance with several companies and not just one insurance company. Also, professional and industry associations and organizations and your State Department/Division of Insurance can be resources for insurance coverage. You can find a local business insurance broker or agent through your Yellow Pages or an Internet search engine will generate resources like the following:

Business insurance:

• Business Insurance Deals and Sites
• Free Insurance Quotes: mostchoice.com
• Insurance Quotes: insure.com

You can review information on the various forms of business insurance at the following websites:

• Protecting Your Assets With Business Liability Insurance: about.com
• Business Insurance Overview: tannedfeet.com