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Insuring Your Business

No matter what type of business you start, insuring your business is one thing you definitely want to consider. Insuring your business helps minimize financial risks associated with unexpected events such as a death of a partner, an injured employee, a lawsuit, or a natural disaster. While business insurance is generally not required by law unless you are an employer, it is wise to purchase enough insurance to cover your assets. If your business is an LLC or a corporation, your personal assets are protected from business liabilities.  However, neither business structure is a substitute for liability insurance, which covers your business from losses.

Insurance requirements for businesses are determined by the state and may differ depending on where your business is located.  If you have employees, most states will require you to have workers' compensation, unemployment, and disability insurance.  You may also be required to carry insurance for a specific business such as child care or a delivery service. 

You can insure your business against all sorts of risks.  Your insurance agent is the best place to get advice on specific policies.  But there are some common types of business insurance you may want to consider.

General liability insurance: Insures your business against lawsuits due to accidents, injuries, or property damage, libel, and slander. 

Product liability insurance:  Product liability insures your business against financial loss as a result of a defective product that causes injury or bodily harm. If you manufacture, distribute, or retail a product, you may be liable for its safety and should definitely consider this.

Professional liability insurance:  If your business provides a service instead of a product, you should consider having professional liability insurance.  This insures your business against claims of malpractice, errors, or negligence while providing services to your clients.

Commercial property insurance:  If you have a brick-and-mortar location for your business, you should consider commercial property insurance.  This insures your business against any loss or damage of company property due to things such as fire, wind, civil disobedience, or vandalism.   

Home Based Business Insurance:  Many home based entrepreneurs think they are covered by their homeowner's insurance.  This is usually not true, unless you added riders to your policy to cover some business risks.  Even then, these riders only go so far.  You may wish to consider the purchase of additional policies to insure your business against other risks.


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