BBB: Pick the right insurance policy for your new small business

Business insurance protects your small business, both financially and legally. However, if you are just starting out, navigating insurance policies can be tricky. Some kinds of insurance are required by law, others by your clients, and other types are optional.

How do you know what policies you need for your business? BBB offers the following tips to help you make a good decision.

HOW TO CHOOSE SMALL BUSINESS INSURANCE

Check your requirements. Before you start considering plans, find out what kind of insurance you are legally required to have. If you have employees, the United States federal government requires your company to carry unemployment, disability, and workers' compensation insurance. Also, check your regional government website to ensure you meet state or province-level requirements.Assess your business risks. Think about what risks your business may run. Do you work in an area where natural disasters or accidents could affect your business? Are you at risk of lawsuits? Do you have a physical office that could be damaged? Do you sell physical products that could be lost, broken, or stolen? These factors will help you determine what kind of insurance you need.Know types of insurance and what they cover. These types of business insurance are the most common. However, depending on your type of business, you may need more specialized policies. For example, if your company manufactures something, product liability insurance will protect you in case a defective product injures someone. Here are different types of insurance:

General liability insurance: This insurance policy protects your business against financial loss in many situations, such as a customer injury at your business, property damage to your business, or defending your business against a lawsuit.

Errors and omissions insurance. This policy, also called professional liability insurance, protects you in case of business error. This type of insurance is common in service-based businesses, such as consulting.

Business interruption insurance. This insurance covers expenses and lost income that occurs during a covered incident. For example, this would cover a shop that had to close due to flooding.

Workers comp insurance. Required by U.S. law for businesses with employees, this policy covers medical costs or lost wages if an employee gets injured at work.

Get help from a licensed insurance agent. If you can't decide how much coverage you need or what kind of policy to purchase, a licensed insurance agent can help. However, keep in mind that agents receive a commission when they sell a policy. Ask for recommendations and check online reviews to make sure you find a reputable agent that will do what's best for your business.Consider bundling insurance into one policy. A business owner policy (BOP) combines several types of business insurance into one bundle. This bundling is a good way to simplify your insurance purchase and get a better price.Compare prices and companies. Benefits and costs, as well as customer service, will inevitably vary from company to company. Get several offers and compare the rates, terms, and benefits before you choose.Reassess your needs on a regular basis. As your business grows and changes, your insurance needs can shift. Every year, reassess your business to ensure your insurance policy still protects you. If need be, discuss any business changes with your insurance agent to see how they might affect your coverage.

MORE NEW BUSINESS INFORMATION

Want more tips to help you grow and protect your new small business? Check out the BBB business news feed at www.bbb.org/us/news/business and BizHQ at www.bbb.org/all/your-business-hq.

Read more about BBB Accreditation Standards at www.bbb.org/bbb-accreditation-standards and BBB Standards for Trust at www.bbb.org/standards-for-trust. Find out how to get BBB Accredited at www.bbb.org/get-accredited when your business is six months old.

Yuma-based John Hessinger is community development director of the Better Business Bureau serving the Pacific Southwest. Contact him at [email protected] or 928-919-7940.