by Carol Wilson
Imagine this tragic scenario: You've finally earned enough financial-backing to promote your products/services fully and can now even afford to rent a small office space to house your merchandise and your small handful of employees.
A few months pass by smoothly, but with all of the stresses of taking inventory, creating invoices, and dealing with manufactures and customers you forget one small but oh-so-important thing: business insurance. Not too shortly after you come to see windows shattered and your office stripped clean. Or worse—a customer calls to file a complaint that your product actually injured him or her. Soon you've lost everything you've worked hard for and your life savings due to a law suit—or at the very least you're short changed thousands of dollars' worth of merchandise and supplies due to theft.
Business insurance is something that's needed at the immediate preliminary stages of any startup or entrepreneurial endeavor, yet its importance it all too often downplayed or overlooked until it's too late. Business insurance, in short, can help protect everything you've worked so hard to launch—your business.
It can help compensate loss if a robbery occurs or if a weather storm (or fire) destroys your products/office building. It can also help cover the expenses of a legal team or legal fees if an employee or customer decides to sue your company due to injury or negligence. If an employee or customer gets injured on the job, it can also help cover medical expenses. Lastly, business insurance can help cover the costs of run down equipment that your business relies on.
That said, every entrepreneur needs small business insurance. But that doesn't mean every small business owner needs the same type of business insurance. It all really depends on what you're selling and the degree of risk that your products and or services possess. Unfortunately, there isn't one small business insurance policy that you can purchase in one neat little package. You will most likely have to tailor the protection your specific business needs by combining several different policies. To learn about the most common types, continue reading below.
General Liability. This is the most basic type of insurance policy. It will help cover the medical costs associated with customers or employees who may injure themselves. It can also help cover some legal fees.
Product Liability Insurance. This policy comes in handy if your product causes bodily harm to a customer or his or her property. The amount you will need to purchase should reflect any potential hazard(s) your product or services may possess. For example, a small business owner who sells toys for toddlers will need more product liability insurance than a small business owner who sells screen T's.
Professional Liability Insurance. This policy on the other hand helps protect you if your services injure a customer due to malpractice or negligence.
Property Insurance. Helps protect you if your building, equipment and or inventory are damaged due to a weather storm or fire. Also protects you if a robbery occurs. If you work within your home, you still may need to purchase property insurance since your homeowner's insurance may not cover the added business-related merchandise.
Business Income Coverage. Lastly, this policy helps protect your income when you must temporarily suspend operations.
Carol Wilson is a regular contributor to www.businessinsurance.org, a website that specializes in insurance options for small businesses and large corporations. She welcomes your comments and questions.