If you own a small business, then it is imperative that you have some kind of Workers’ Compensation insurance. Although each state’s laws are different, generally if you have four or more employees, you are then required by law to have Workers’ Compensation coverage. In some states, construction businesses are required to have this coverage even if they only have one employee.
Your workers are perhaps the most important asset you have, so you want to be sure you take care of them well. Workers’ Compensation insurance works in favor of both the employee and the employer. It provides partial wage replacement and medical benefits to employees injured on the job while protecting the employer from the threat of an employee-initiated civil lawsuit.
Business property insurance is the second most important type of small business insurance you must have. There are three main types of property insurance that protect business property as well as physical assets: Named-Peril coverage, Comprehensive coverage and Windstorm insurance. Named-Peril coverage protects your small business from losses caused by explosions, smoke and fire. Comprehensive coverage offers much broader coverage for natural perils, but excludes a few. Windstorm insurance covers losses to your building and its contents caused by hail, hurricanes and other windstorms.
More specifically, small business insurance for your property provides coverage for your building and all its business-related content. This includes chairs, tables, equipment and desks. Your policy should also provide coverage in the event of an earthquake, a loss of income or a flood (if applicable). You can sit with your insurance agent and develop an all-risk policy that will cover your computer, all of its software, and any valuable records you have.
If you have a small business that you operate from home by yourself, then most of what applies to business owners with employees applies to you as well. Your renter’s or home owner’s insurance simply is not enough to protect any professional tools and equipment you may have in your home. Most of these policies will not even protect property used for business purposes. You need a small business insurance policy specifically if your home business deals with walk-in customers, inventory, or tangible products. A small business policy will give you liability and property coverage as if you were renting space for your home business. Consult with a trusted agent to make sure your liability and property insurance needs are met.
There are a number of health insurance options for small business and home business owners as well. When it comes to health care, the group option is the best way to go. However, some small business owners have to use an HMO or an individual policy until they qualify for a small-group policy. There are ways around this, however. If your spouse has a job that provides health care, you may be insurable under their plan. Also, joining certain professional organizations or associations may afford you the benefit of utilizing group insurance through your affiliation.
In addition to Workers’ Compensation coverage, it is highly recommended that small business owners with employees purchase a Comprehensive General Liability (CGL) policy. This type of insurance covers third parties for personal and advertising injury, medical expense or medical payments, products and completed operations, and general liability for your property. This policy also provides you with Fire Legal Liability protection. This is especially beneficial if your landlord’s property is damaged or experiences loss due to your negligence.