Insurance for Small Businesses

A previous blog post on Business Structure Basics describes some of the difference between the most common structures. For instance, a limited liability company, also called an LLC, typically only protects your personal property from lawsuits and even that protection is limited. No matter what type of business structure you choose for your startup, your business will need to get insurance. Business insurance protects you from unexpected costs from accidents, natural disasters, and lawsuits that could potentially run you out of business if you are not protected by the right insurance.

The federal government requires every business with employees to have workers’ compensation, unemployment, and disability insurance. But you may be legally required to purchase other types of insurance by the State of Texas including health insurance, according to the Texas Department of Insurance.

The Small Business Administration lists 6 common types of business insurance, what it does and what type of business it is for:

General liability insurance– This coverage protects against financial loss as the result of bodily injury, property damage, medical expenses, libel, slander, defending lawsuits, and settlement bonds or judgments.

Product liability insurance– This coverage protects against financial loss as a result of a defective product that causes injury or bodily harm.

Professional liability insurance– This coverage protects against financial loss as a result of malpractice, errors, and negligence.

Commercial property insurance– This coverage protects your business against loss and damage of company property due to a wide variety of events such as fire, smoke, wind and hail storms, civil disobedience and vandalism.

Home-based business insurance– Coverage that’s added to homeowner’s insurance as a rider can offer protection for a small amount of business equipment and liability coverage for third-party injuries.

Business owner’s policy– A business owner’s policy is an insurance package that combines all of the typical coverage options into one bundle. They simplify the insurance buying process and can save you money.

It is important for you to know what type of insurance is required by law for your small business. Failure to obtain the correct insurance may prevent you opening or operating your business. Then, asses what risks are associated with your startup. Ask yourself what kind of accidents, natural disasters or potential lawsuits could damage your business? The State of Texas through the Texas Department of Insurance provides a free and secure service to help Texans shop for insurance, including commercial insurance by searching for the type of coverage you need including a licensed insurance agent and company in your area.