If a small business consists of a person working on a computer in their home or a retail operation with dozens of employees, they both have one thing in common: they need business insurance. Having any size small business represents not just a financial investment but also a lot of hopes, dreams and hard work. Business insurance helps protect the small business when any unforeseen tragedy arises.
Types of Small Business Insurance
Exactly what types and how much small business insurance needed will be determined by the type of business and the size of its potential liability and loss. The two major types of insurance are commercial business insurance, which is not required by law to have but could be a good investment. The other one is employer insurance which a small business is required to have by law.
Employer Insurance
Workers’ Compensation Insurance
Any small business that has employees is required to have Workers’ Compensation Insurance coverage. This provides money and benefits to an employee who is hurt during the course of performing their duties on the job. A small business can get this from their state’s Workers’ Compensation Insurance program or through a company that offers such insurance policies.
Unemployment Insurance Tax
Small businesses must efile this when tax season comes around. This is paid by any small business that has employees and the amount is determined by the state where the business is located.
Disability Insurance
It’s designed to replace a certain percentage of a worker’s income if some type of affliction prevents them from earning income. If a small business is located in one of six places it is required to purchase disability insurance. California, Rhode Island, Hawaii, Puerto Rich, New Jersey and New York all require small businesses to carry disability insurance. If the small business is not located in one of these areas, they still have the option to purchase a disability insurance policy for their employees but are not required by law.
Commercial Insurance
Commercial Property Insurance
This is an optional insurance that is considered vital to many small businesses. It covers damage and loss experienced by a company because of things such as smoke, fire, severe weather, etc. Since the term property could mean many things it could include lost business income due to business interruption, damage to buildings, computers and more.
Other Types of Small Business Insurance
Home Based Business Insurance
A home-based business is usually not covered on a homeowner’s insurance policy. This policy would be able to protect against professional and general liability.
General Liability Insurance
This will protect the small business owner against legal issues that arise from workplace accidents and injuries.
Product Liability Insurance
If a small business is based on the retail or wholesale distribution of products this can protect against financial loss from defective products that caused an injury.
Professional Liability Insurance
This protects small businesses that provide services directly to customers. It covers malpractice, negligence, etc. in providing the service…
It is important for all small business owners to know what insurance they are required to have by law and assess their business when considering any optional insurance.
Author’s Bio: Jimmy Jones writes for Smallbusinessinsurance dot com and is open to writhing on a freelance basis on anything related to his industry.
Image courtesy: FreeDigitalPhotos.net
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Great post – I think there are so many types of insurance it can be so difficult to know what you need and do not need as a small business.
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thanks for posting! Article is filled with great information on the requirements of small business insurance.
This is an excellent article. Most business owners don’t understand this when they buy business insurance. There’s some stat that I read that says about 75% of U.S Businesses are under insured and I think that this article can help fix that problem.
Insurance can be a beneficial step for a promising future. Small business faces many problems now and then; hence they must have insurance as a precaution. Thanks for sharing such valuable content.