What Insurance Do I Need to Open a Small Business?

Purchase the right insurance to protect your new venture.

You’re ready to start your own business, and you’re taking steps to make it a reality. There are so many decisions to make: determining your vision, identifying your customer base, creating a marketing plan.

Another important decision you may not think about at first is purchasing the right insurance to protect your new venture. Your independent insurance agent can help you identify your company’s risk exposures and tailor an insurance program for your needs. Here are some things to consider:

Property

Valuing your assets is a good place to start. In case of a loss, you have to replace what is damaged. Think about the most likely ways your building or business personal property can be damaged. Fire is a logical place to start, but other causes of loss to think about are windstorm, flood, water damage and theft. Is there anything inherent to your operation that could be the cause of a loss? Are you responsible for other people’s personal property in your care? How much cash do you keep on hand?

Next, determine when your business personal property is off your premises:

• Are raw materials or finished inventory shipped to you?
• Do you send products to your customers?

If you do suffer a loss, how long will you be out of business or at least have your business operating at partial capacity? How will you pay the bills? How will you provide your product or services to maintain your customers? Insuring the flow of your income is equally as important as replacing your tangible assets.

General Liability

Commercial general liability insurance covers claims for injury to others and damage to property of others arising out of your business operations, whether the injury or damage occurs on your premises or at your job site. You can be covered for injury or damage caused by goods you’ve sold; for work you’ve performed; for offenses arising out of advertising of your goods and services; and for false arrest, slander and wrongful eviction of others.

Crime

Commercial property policies do not cover two significant exposures that could jeopardize your business’s financial solvency:

• Any loss to your money or securities, which include currency, bank notes, checks, registered checks, stocks, bonds and credit card receipts. These are not covered if they are destroyed, stolen, corrupted or lost.
• Dishonest acts of your employees or anyone else to whom you entrust your personal property. This includes theft, burglary, robbery or someone taking your property under false pretense.

Commercial crime insurance protects the assets you have worked so hard to obtain. Crime coverages can be purchased to protect assets while on your premises; while being delivered to your bank or a job site; and even while being kept in your bank.

Auto

Whether or not your business owns automobiles, you probably still need automobile coverage. Automobile liability exposures arise from the use of hired or nonowned vehicles as well as vehicles you own. Physical damage coverage protects your company’s investment in owned vehicles. In addition to liability coverage, you may need physical damage coverage for vehicles your company rents or leases – or for your employees when they rent vehicles in the course of employment. Along with the basic coverages such as liability, medical payments and physical damage coverage, many other coverages are available to tailor an automobile policy to meet your company’s particular insurance needs.

While insurance may not be the first or most exciting item on your to-do list, working with an agent to obtain the right coverages can protect your startup venture and its future success.

This loss control information is advisory only. The author assumes no responsibility for management or control of loss control activities. Not all exposures are identified in this article. Contact your local, independent insurance agent for coverage advice and policy service.