Is Business Insurance Right for You?

By the small business content developers at

Many entrepreneurs open their businesses with shoestring budgets, hoping that sweat equity will turn into measurable value. As such, things like business insurance may fly right out the window when the founder isn’t even paying herself a basic wage at the beginning.

However, business insurance in its many forms should not be overlooked or ignored by small business owners. Just as homeowners insurance or renters insurance protects your investment in your property, and car insurance protects your vehicle, small business insurance can provide similar types of protection in the very thing on which you’ve bet your bottom dollar: your business.

Business insurance can provide multiple resources and protection to you and your business. Even if you decide to forego insuring your business for whatever reason, it’s in your best interest to explore some of the benefits of coverage. Before you say ‘no’ to business insurance, here are 5 questions you should ask yourself:

1. What types of services or products will my business ultimately offer?

Depending on the goods or services your company provides, you may be liable on behalf of your company in the event of injury or illness alleged to be caused by your company. General liability insurance can protect your company in case your products are claimed to cause injury, while professional liability insurance can help if your client accuses you of professional negligence in the course of fulfilling your contractual obligations.

2. Will my business need specialized or expensive equipment to conduct my day-to-day business?
While many solopreneurs believe they can operate their business with only a laptop and an internet connection, the fact is that as your business grows you may depend on extensive equipment like printers, cameras, expensive software, proprietary data, recording equipment, and other technological goodies that require a hefty investment. If a disaster destroyed all the equipment you use in your business, would you be able to replace it in 24 hours? If the answer makes you hesitate, you are a perfect candidate for business property insurance.

3. Will my business rely on my personal vehicle to convey goods or employees?

You may already have vehicle insurance, but many personal auto policies specifically exclude commercial coverage. That means if you are conveying products for shipping or goods to be used for business purposes and they are damaged in a collision or removed by theft, your auto insurer is not obligated to provide additional coverage for those items. In the event that you lend your vehicle to an employee to conduct business on your behalf and that driver is involved in an accident, your company may become liable for damages. Depending on your company's needs, either commercial vehicle or business vehicle insurance could provide necessary coverage in the above scenarios.

4. Will customers, service providers, or employees visit my place of business?

If so, your company definitely requires general liability insurance. If someone is injured on your premises either due to negligence or just plain bad luck, your company may need to defend itself against legal claims, and proper insurance coverage can even extend to legal representation on your behalf. Unfortunately, liability waivers may not be sufficient in all cases and you may need litigation to protect your company. An open door may open you up to liability.

Even if your don’t expect anyone to cross your threshold, many home-based businesses may benefit from additional business insurance that can be added to most existing homeowners or renters insurance policies

5. Is my business dependent on an individual in order to operate on a day-to-day basis?
Many small businesses exist because of the skills and talents of one gifted individual who contributes greatly to the success of those businesses. If your small business requires the labour or services of one or two key individuals, then your company is only an illness or injury away from serious trouble. Your enterprise is a good candidate for key person insurance, which provides coverage in the event of serious illness or death and can help your business stay afloat as it transitions in the event of such an emergency.

While business insurance might seem like something your company might look into ‘some day,’ the best practice is to research the possibilities from the outset. Don’t reject business insurance because of fear of cost or out of a mistaken belief that you don’t need it. A responsible business owner should meet with a broker or agent to discuss available options to protect her investment, and many insurance providers offer business owners policies that are customized for each company’s unique needs. A little research and expenditure may go a long way in helping your company weather a disaster.

By Andrew Patricio

September 07, 2016