Insurance for a Small Business -Top 10 FAQ’s

do small  businesses need business insurance, female business owner displaying shoes.

Hoping to find Insurance for Small Businesses; keep reading because we have a lot to cover. Below we discuss the top 10 small business insurance questions that many business owners have inquired about. Such as how to choose the right insurance type of insurance, what is the right amount of coverage, and how to find the best company. An incorrect answer to any one of these questions could be fatal or at the very least induce a few scratches.

Does Small Business Owners Really Need Insurance?

Many small business owners wondered if insurance is Really needed. (none of us, I know) Unfortunately, the answer is a resounding YES!!!! Business insurance isn’t only about incompetence, it’s also about protection. 

Business insurance is intended to act as a safety net. There just in case, we need it. It protects us from unexpected loss, unfortunate and unforeseeable accidents, provides aid in case of catastrophic natural disasters, and softens the blow of a lawsuit.

Insurance Can Soften the Blow of a Lawsuit

Question?… When will the next major storm hit? When will the next person slip and fall or badly injured themselves at your establishment? Fortunately, we don’t know; therefore, we all need small business insurance to protect us from the “what could happen”. This doesn’t mean we have to spend an arm and a leg on premiums, but it will cost. Doing a little homework can save you from the insurance hackers! 

sign document photo, written consent form

We’ve prepared helpful tips that can assist in choosing the perfect insurance for your small business. Lastly, we’ve included 4 additional pointers to help you make a more informed buying decision. 

Top 10 Small Business Insurance Questions and Answers 

 Content

1. What insurance does an LLC need?

2. Is it illegal to not have business insurance?

3. Is it mandatory to have business insurance?

4. Can I get insurance without a business license?

5. What insurances are required by law?

6. Does running a business from home affect home insurance?

7. Who needs general liability insurance?

8. Do I need business insurance if I work from home?

9. What is the difference between professional and general liability insurance?

10. What insurance do independent contractors need?

 1. What kind of insurance do subcontractors need?

Subcontractors need to protect themselves just as general contractors do. If your hands are in the pot, look out because you can get burnt. Insurance is Big Business and the sad truth is that he who has the most money wins. So, if you are a subcontractor and something goes wrong…. get ready for the finger-pointing. 

man pointing finger, which is how a insurance claim first starts out. who's the blame?

As subcontractors, our defense is to have independent insurance policies… unless you have deep pockets. Then the question arises, would you rather pay $2000.00 per year for insurance premiums or spend potentially $200,000 for repairs and damages? 

 2. What insurance does an LLC need?

Most LLC invest in general liability insurance. In cases when an LLC can be sued personally, a general liability policy can be used to protect the business owner’s personal assets… such as their house, cars, and income. If there’s enough insurance coverage to cover the losses.

 3. Is it mandatory to have business insurance?

Yes and NO! There are some businesses where insurance is recommended but not mandatory. There are other industries where business insurance is not optional. Even with house rentals, some landlords require renter’s insurance to help protect their assets in case of a loss. General liability and errors and omission is a highly common requirement for many businesses. 

4. Can I get insurance without a business license?

Yes. For example, you can open an alteration shop without a business license; depending on the laws of the land. A better question; is it a good idea to open a business without proper protection? 

To help answer that question, staying with the example above, what if the building burns down with your customer’s items inside. This could be a potential lawsuit if you don’t have enough money to replace the damaged merchandise One unfortunate incident can put an uninsured business owner out of business for good. 

 5. What insurances are required by law?

Each state and country are governed differently, therefore you will have to Google your state or country website to ascertain specific information. In our jurisdiction, we are required to have commercial car insurance, worker’s comp if you have employees, general liability, and errors and omissions insurance.

6. Does running a business from home affect homeowner’s insurance?

Anytime you add more risk to an insurance policy the chances of increased premiums are as certain as death and taxes!… Hell, if you didn’t add risk the probability of increased premiums is as certain as death and taxes. …LOL!!!

 Discussing your business exposure with your agent is a good start. Especially, if you’re housing equipment, maintaining sensitive data, entertaining frequent visitors, handling and preparing food, to name a few. Addressing the risk and including them to your homeowner’s insurance will protect you and your home in case a claim is filed. 

 7. Who needs general liability insurance?

The simple answer is anyone that owns a business should have some type (s) of business insurance. Acquiring business insurance is one way you can shield your personal assets in case of a lawsuit. Since many small business owners don’t have large sums of reserve capital, general liability insurance is there to help cushion the fall.  

 8. What insurance do independent contractors typically need? Working as an independent contractor; you will potentially need general liability, errors, and omissions, and/or worker’s compensation. This protects you and your business. It gives you the same ease of comfort as larger firms are privileged too. Independent contractors can be sued just like the big boys for property damages, bodily harm, and other negligence. 

 9. What is the difference between professional and general liability insurance?

The easiest way I found to explain the difference between general liability and professional services liability is; professional liability is what professionals service providers must-have. Those in professions such as; doctors, lawyers, engineers, and others. Any professional negligent that is related to professional services or advice. And general liability insurance protects against, a business entity that inadvertently causes damage to people, places or things. Such as contractors, painters, an arborist, and others.

Four Things to do Before Purchasing Small Business Insurance 

 1. Risk Assessment: Sit down and think about your business daily operation. What type of services do you provide? What are the dangers or potential dangers? How would your small business survive a natural disaster? For help with these questions and more, the Nation Federation of Independent Businesses (NFIB) can assist you. 

2. Bargain Shop: All insurance companies don’t play fair. And now that our fingers can do the walking, this makes finding an insurance company much easier. Many companies allow you to start the process online which saves more time. It’s always a good practice to comparison shop. Not only for the lowest prices but for better benefits and flexibility. Most importantly, learn how they handle claims. 
 

3. Find a professional licensed agent: It’s always good to have someone that knows their industry. It’s even better to find an agent with more than 10 years’ experience. Years equal experience. They’ve had time in the field and can advise you from OPK (other people’s knowledge) and experiences. The bottom line, they make money when they sell a policy, so choose wisely. 


4. Perform yearly checkups: Take your business temperature to see where you stand. You may need more or less coverage from year to year, dropping or adding services or procedures is expected during a normal business lifecycle. On another note; remember to add new cars, equipment purchases, and services to your policy.

 We included a chart that will break down what kind of insurance is recommended for a few of the most popular industries. Six common types of business insurance.

insurance chart types in a chart format

Conclusion:

The main point regarding small business insurance is business owners and professional service providers need it. The only questions are, what kind and how much should they cost?

To address the cost question, we find the easiest way to ascertain price is to retrieve quotes via an online search or phone a live agent. If time permits, get three quotes of equal services and choose one. Great news, if the first one doesn’t work out, next year choose another. 

Additionally, your agent can assist with addressing which types of insurance are needed. Keep in mind to not procrastinate because one unexpected mishap can ruin a business. For more small business Insurance info visit your State Website

  • Business auto-commercial
  • Worker’s compensation
  • Business liability Insurance
  • Business property insurance

Insurance you may want to consider depending on your type of business.

ACH – New Underground Money Railroad
21-Devastating-Marketing-Mistakes-to-Avoid
Password Keeper _ Advice from Former FTC

Deborah Pretty

Hi Everyone! I hope that the article you read today will be used as another building block to further grow your small business empire. PYTalkBiz.com was solely designed to help you reach your business goals, quickly and more efficiently!

Leave a Reply

Your email address will not be published. Required fields are marked *

Recent Content

error

Enjoy this blog? Please spread the word :)