Understanding Insurance Issues

Business Insurance | What Every Small Business Owner Needs To Know

Opening a small business may be a dream for many people, but the insurance needs can be overwhelming. Here are a few things you will need to know.

General Liability 

This is the most important insurance for any business, large or small. It protects you from third-party claims of bodily injury and property damage. If someone sues you or your business, this insurance will cover the cost of a defense lawyer, medical bills, and any monetary damages that may be awarded.

Worker's Compensation

If you have employees, you are required to carry worker's compensation insurance in most states. This insurance covers medical bills and a portion of lost wages if an employee is injured on the job.

Depending on the state that you do business in, you may be able to exempt office staff from the policy or a spouse, which can save you money on the premiums.


Like homeowner's insurance, property insurance covers damage to your business property from fire, theft, vandalism, and natural disasters like floods and earthquakes. In other words, if you own or rent office space, the building, as well as any office equipment, would be covered.

If you have a home-based business, however, a business insurance policy may not be what you need. Check with your insurance agent to see if your business property is covered under your homeowner's insurance policy or can be added as a rider, which may be less expensive than commercial insurance.

Key Person

If your business would be negatively impacted by the death of a key employee, you may want to consider key person life insurance. This type of policy pays out a death benefit to the business in the event of the death of a key employee.

The proceeds can be used to cover expenses like recruiting and training a replacement, as well as help the business stay afloat during a difficult time.


An umbrella policy provides extra liability protection above and beyond the limits of your other business insurance policies. It's a good idea to have an umbrella policy in place if you feel that your business is at risk of lawsuits or large payouts. Umbrella policies cover a wide range of unique situations.

As with any type of insurance policy, talk to your local commercial insurance agent for details about your specific business. If they can't help you, they can refer you to a capable agent that can write business lines.