What you need to know about small business insurance

One of the most important ways to protect yourself and your business assets from unexpected catastrophes is by choosing the right coverage plan. The Small Business Administration points out that business insurance offers more comprehensive coverage than what typically comes with your business registration as an LLC or corporation.

There are different policies that cover different aspects of your business — some you might need now and others that could become more relevant as your business grows.

For example, at Target, we require our vendors at minimum to carry General Liability insurance with Product Liability insurance. But if you’re preparing for an investment round, you might need some additional coverage.

The most common types of business insurance

• General liability insurance. As the most basic kind of coverage, this helps protect your business from bodily injury or property damage claims.
• Business income insurance can replace lost income if you’re unable to operate your business due to property damage from situations like natural disasters or theft.
• Business property insurance, sometimes called small business hazard insurance, is coverage for a physical space. This is a generally preferred option if you own or rent equipment, a retail space, or production space, which would be protected by insurance in case of fire, hail, vandalism, etc.

A business owner’s policy is a cost-savings bundle of general liability, property and income insurance.

Plus, founders creating physical products often carry product liability insurance. This policy can protect your company from claims of bodily harm or property damage that your products cause.

Working from home? There’s a policy for you.

If you’re operating your business out of your home, you could consider a home-based business policy. This is coverage added to your homeowner’s insurance as a rider. It can provide protection for a smaller amount of equipment and third-party injuries.

Have employees? You might need these policies.

First, employment practices liability insurance, also called employers’ liability insurance, can protect your business from claims like discrimination, harassment or wrongful termination.

You’ll also probably need to carry workers’ compensation insurance (check the requirements in your state). This policy provides benefits to your employees if they get a work-related injury or illness.

Courting investors and board members? Be proactive.

Investors and board members often ask for Directors and Officers Insurance. This policy will protect those investors’, directors’ and officers’ assets from a claim of company mismanagement or non-compliance to regulatory guidelines. In case of a lawsuit, this policy would provide legal defense against covered claims.

Ready to get coverage? Start here.

With this overview as a start, below are some next steps you can take to protect your business.

1. Before selecting coverage, consider interviewing a few different licensed agents to get a better sense of coverage options and prices.
2. Add insurance premiums to your budget. Small business insurance costs can vary based on coverage and policy, but here’s a ballpark of what you can expect to spend on monthly premiums according to leading insurance company The Hartford:
   • $70 for workers’ compensation insurance
   • $88 for general liability insurance
   • $250 for a business owner’s policy.
3. Mark your calendar for next year. It’s good practice to reassess annually to be sure you stay fully covered as your business grows.

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