Who Needs Business Insurance?

Every business, from small Schedule C’s operating out of the owner’s home to large corporations with thousands of employees, needs to be properly insured. Levels of coverage and types of business insurance will vary by company, but no business should be without a general liability or professional liability insurance policy. Even if you are a sole proprietorship, business insurance is highly recommended, because it acts as an additional layer of protection between business and personal assets.

In some states, business owners will need to provide proof of minimum general liability coverage in order to obtain permits to make sales at retail, city or town operating permits, or other licenses related to the business. Consultants and other professionals may be required by law, or by corporate clients, to carry professional liability/errors and omissions insurance in amounts up to or exceeding $2 million. This standard is especially applicable to consultants working in the construction or architectural fields, as many contractors require all consultants and subcontractors to be individually insured.

Any businesses with employees on payroll are required by law in most cases to carry worker’s compensation insurance. Disability insurance may be required as well. Even owners with no employees sometimes choose to carry disability insurance or worker’s compensation policies for themselves in case they are temporarily unable to operate their business. Those businesses, which rely mainly on subcontractors (those paid via IRS Form 1099) may be exempted from worker’s compensation/disability laws and requirements. However, businesses of this type may consider requiring their subcontractors to carry their own worker’s compensation and disability policies to ensure the most protection.

Many businesses choose to offer medical and/or dental insurances to their employees, and ask their employees to contribute a percentage of the premium. Most insurance companies that offer other types of business insurance do not offer medical insurance programs, and therefore these insurances must be purchased separately. A knowledgeable insurance agent can recommend medical insurance programs available in your state, and discuss the pros and cons of offering medical insurance coverage to your employees. Sole proprietorships and small businesses may also be eligible for special group rates through the Better Business Bureau and other such organizations.

It is worth noting that businesses operating out of the owner’s home may be in some respects covered by the homeowner’s policy, i.e. damage to the premises, injuries on the premises, etc. In the event of a claim, it is a good idea to keep personal and business insurance policies (and revenues) as separate as possible. However, even though a home-based business may be partially covered under a standard homeowner’s insurance policy, employees, products purchased for or manufactured by the business, and other types of coverage associated specifically with the operations of the business will not be covered by such a policy. It may be a good idea for home businesses to carry a separate general liability or professional liability policy.

To summarize, every business needs some form of business insurance. A consultation with an insurance specialist is the best way to determine which forms of coverage are vital to your business, and which are merely a good idea. At Insurancequoteonline.com, our specialists help not only contractors and other construction businesses, but every type of small business. Call us today at 516.294.1072 to learn more about the types of insurance your business needs, and get a free quote for your business insurance package.

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