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No matter your business risk, there's an insurance policy to cover it. Your exact needs depend on your line of business, the size of your company and state law. Workers' compensation coverage is mandatory for most businesses, for instance. Other polices, though not legally required, make good business sense.
Workers' compensation insurance pays employees for work-related illness and injury, rather than forcing them to sue employers. Most states require businesses with staff to buy workers' comp insurance, but there are exceptions. In New Jersey, for example, you don't have to buy a policy, but you're still liable for compensating workers for on-the-job injuries and illness. Your state's workers' comp office should be able to provide you with the rules you'll need to follow.
If a visitor to your office or store has a fall, or an employee accidentally injures her, general liability insurance covers the doctor bills. It also pays for damages and court costs if the visitor sues. The Small Business Administration says the amount you need varies with your line of work. For example, a building contractor is at more risk than a consultant and therefore would be more likely to need the coverage. In addition, business owner insurance combines liability with property insurance in a single policy.
General liability doesn't protect you from lawsuits over defective products. The Nolo legal website recommends you protect yourself with product liability insurance. The more assets your business has and the more damage your products could do, the more you need it. Chemical suppliers are more at risk than notebook makers, for instance. If you're selling services rather than products, errors and omissions coverage kicks in if customers sue over your work.
Your general liability product doesn't protect against car accidents. If you sit in your home office and never drive on business, you probably don't need anything beyond your regular automobile policy. Should you or your staff drive company cars, or use your own cars for business -- such as if you need to drive to meet clients or make deliveries -- commercial auto coverage is a valuable protection.
Employee Theft Insurance
Sometimes called fidelity insurance or crime coverage, employee theft insurance safeguards against losses caused by an inside job. Business Insurance magazine says policies can cover outright theft of company property by an employee, or simply the property disappearing from your business premises. You also can buy coverage to protect against a client's property disappearing while it's in your employee's custody.
Multiple types of property insurance policies can protect your business assets and buildings against outside theft, fire, storm and other perils. Basic property insurance covers a wide range of threats but omits others. For flood insurance, for instance, you need to contact the federal government's flood insurance program. Business-interruption insurance is covered under some property policies. It provides financial support if your business has to close because of a fire, for example.
- Small Business Administration: Insurance Requirements for Employers
- Entrepreneur: Workers' Compensation 101
- Nolo: Business Liability Insurance
- Insurance Journal: The Ins and Outs of Errors and Omissions Insurance
- Business Insurance: Many Midsize Companies Go Without Coverage for Employee Theft
- Small Business Administration: Types of Business Insurance
A graduate of Oberlin College, Fraser Sherman began writing in 1981. Since then he's researched and written newspaper and magazine stories on city government, court cases, business, real estate and finance, the uses of new technologies and film history. Sherman has worked for more than a decade as a newspaper reporter, and his magazine articles have been published in "Newsweek," "Air & Space," "Backpacker" and "Boys' Life." Sherman is also the author of three film reference books, with a fourth currently under way.