What is the Minimum Insurance Coverage I Need for a Small Business?

Protecting the investment you have made in the time, money and hard work it has taken you to launch your small business is essential. The only way to ensure proper financial protection for your company is by obtaining a sold business liability insurance policy and deciding if an advisor is needed. This can take some time especially if your business is brand new and you have little experience knowing how much to pay for a premium or how much to pay for ample coverage limits.

Trusting yourself and your Insurance Broker

Most commercial insurance agents know what makes up a good quality policy. The best agents can assist you in putting together a general liability insurance plan that works for the amount of risk your business faces each day. Levels of risk vary from one industry to another, but you can trust your professional insurer to help you get the basic types of coverage your business requires.

Most areas will require that a certain level of insurance be carried by all companies, no matter what size they are or industry they engage in. This is especially true if your company has employees. It is a good idea to carry worker's compensation coverage even if you only have one employee, although legally you may not be required to do so until you have two or three.

As far as the limits of coverage you buy for your coverage goes, this is where things can become complicated. The minimum amount of coverage you carry may be much different than what your local laws require you to carry. No small business owner wants to feel that a disproportionate amount of money is going towards insurance premiums versus all other expenses. But, no small business owner wants to face being put in a predicament of having purchased insurance coverage only to find once they file a claim that coverage falls several hundred thousand dollars below what is needed.

Discovering which Coverage Limits and Types Work

There are some types of coverage within a general liability policy which may not apply to your company. If your small business manufactures and sells products, an errors and omissions policy may not apply. Errors and omissions would be strongly recommended if your company's business involves providing consultations or professional advice clients act upon, such as is the case with a psychotherapist or an accountant.

There are three types of coverage in most general liability policies protecting against injury claims, property damage and lawsuits. The way to make sure you have enough in all areas is to assess your assets, debts and risks for yourself. You will want property damage coverage even if you rent.

You will want insurance against injuries on the business property. You will also want coverage against legal claims or claims of negligence. Even a competitor claiming your company stole their advertising slogan could wipe your business out if it does not carry plenty of liability coverage pertaining to advertising claims.

The answer to how much coverage is enough can be determined by factoring how much your company earns, how much it owes, and how much would be more than plenty to cover it in the event of a lawsuit or a serious injury occurring at the business's premises. It can help to consult with any professionals your company has at its disposal such as an accountant or an attorney. Your small business can obtain the minimum insurance coverage required by law, but it is important to consider obtaining the maximum amount you can afford.

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