Is Your Business Properly Covered for Any and All Mishaps?

Kate Supino

October 28, 2015

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Whatever type of small business you're in, you should plan for the need for business insurance.

Available for various purposes, some kind of insurance for businesses is necessary even for sole proprietorships. However, not every kind of business needs a full range of insurance coverage.

Here's a rundown of the various insurance policies available, and what they are for….

Workers Compensation

Although some may not think of workers comp as being insurance, it most definitely is.

It's compulsory in almost every state for every business with more than one employee. Workers comp covers statutory claims made by employees against injuries and illness at work. Workers comp governance is state-regulated.

Businesses can purchase workers comp insurance through private companies such as Progressive, but small businesses may be able to get more attractive rates through special insurance companies that exclusively handle small businesses, like Employers. If a small business has not had a previous claim, they will typically get the best rates.

Business Insurance

Business insurance covers property damage to equipment owned or leased by the business.

Claims due to flood, power surges, natural disasters like earthquakes and the like would all be handled by the company's business insurance. Rates for coverage will vary depending on the equipment being covered.

Private commercial insurance companies like Farmers Insurance usually have a provision to handle business insurance policies.

Though a business owner need not have business insurance (unless the leased equipment contract demands it), it is recommended for most business owners; especially those who have expensive equipment on the premises.

Even if the owner works from a home office, it's worth covering expensive equipment with a business insurance policy, since the homeowner's policy may not automatically cover items owned by the business.

For insight into the wisdom of purchasing surety bonds for businesses, read the article, "Expert Interview with A.W. Berry on Shopping for Business Insurance and Surety Bonds."

Professional Liability Insurance

Professional liability insurance is for professions who need to carry insurance in order to practice their provision.

Two common professions that always demand liability coverage are engineers and architects.

Often, minimum liability coverage of two million dollars is required, though sometimes smaller limits of one million dollars are allowable.

Each year, professionals must submit certificates of liability insurance to companies for whom they do business.

The other companies aren't actually the ones demanding the liability insurance coverage; it's their own insurance companies that won't allow them to do business with licensed professionals who don't have professional liability insurance.

This kind of insurance is oftentimes extremely pricey, and the premium is often the most expensive monthly payment that a licensed architect or engineer practicing on their own, has to make.

To acquire the best possible rates for professional liability insurance, it's highly advisable to go through an insurance broker who specializes in the industry.

Discounted rates are also available through membership in trade organizations, such as the American Society of Civil Engineers.

The price of insurance can never be ignored when preparing a monthly business budget.

Depending on the nature of the small business, insurance premiums can be a considerable expense.