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Small Business Insurance Checklist

Business Insurance Checklist

When you start a small business you’ll be presented with many new and complicated choices, among them will be the need to buy small business insurance. This can seem a bit daunting, possibly expensive … and maybe not very fun. Wouldn’t it be easier if you had a small business insurance checklist? Of course, a checklist would simplify the process, that’s why we created one.

When you buy small business insurance for the first time you’ll be breaking new ground. You’ll know you need it, but you won’t know what kind or what options are right for your business. You also won’t know how much it normally costs, just that it’s going to be more than you want to spend. Business insurance can be complicated.

But you don’t have to navigate this new terrain without a guide, you can get advice from a business insurance agent. Or, if you’re more of a DIY consumer, looking to buy small business insurance, we’ve put together this small business insurance checklist. Review the checklist, and see what type of small business insurance you need.

The small business insurance buyers checklist

Each business is a little different, so there isn’t a single answer to what business insurance to buy. Therefore, you need to review the specific details of your business, then you’ll begin to uncover where your risks reside. This will help you understand which business insurance coverage you’ll require.

Note, that this checklist works best for small businesses. If you own or operate a large, complex business. You’ll want to consult a business insurance agent or risk management professional.

Checklist Item #1 | Getting the basics

The first thing you’ll need as a small business owner is liability insurance. This is the most common insurance purchased by small businesses, and so ubiquitous that most people euphemistically refer to it as business insurance. There are two types of liability insurance you’ll need to consider.

  • General Liability Insurance: This coverage provides you protection when your business is facing a claim for damages or a lawsuit from a third party for bodily injury or property damage resulting from a covered loss. A general liability insurance policy will also provide coverage for product liability or advertising liability.
  • Professional Liability: (also called Errors & Omissions Insurance), This coverage protects a business when there is an error in professional advice or consultation or an omission that leads to damages to a client. This is different from general liability insurance in that it is primarily for exposures related to your professional conduct.

Checklist Item #2 | Do you own or lease property?

Another sign that your business is growing is the need for commercial office space. If you’ve purchased, or even leased commercial facilities you’ll need commercial property insurance to provide insurance protection to the building where you run your business. This may also be a requirement of any landlord or mortgage company.

As a small business, you typically will not purchase commercial property insurance as stand-alone coverage. This is because most small businesses qualify for a convenient bundle called a  Business Owner’s Policy ( or BOP) that includes property insurance along with general liability insurance.

In fact, the business owner’s policy also includes a coverage called business personal property, which provides coverage for property owned by the business like desks, computers, and other items used in the day-to-day performance of your business.

Checklist Item #3 | Do you currently have or intend to hire employees?

A successful small business will eventually need to hire employees to help you provide services or produce products. If you have employees, there is a required coverage and one that is highly recommended:

  • Worker’s Compensation Insurance: If your business has employees, workers’ compensation insurance is a legal requirement in every state but Texas. It covers the costs associated with injuries and illnesses your employees sustain on the job. For details, check out our state-by-state guide to Workers’ Comp laws.
  • Employment Practices Liability Insurance (EPLI): This coverage protects you when an employee sues you over employment-related matters like wrongful termination, discrimination, or harassment. Employment practices liability insurance is highly recommended for all businesses with employees.

Checklist Item #4 | Will your business own a vehicle or will employees drive for work?

This is an area of misunderstanding for many small business owners. Too frequently it’s assumed that a personal auto insurance policy will provide coverage for work-related driving. This is not the case. In fact, many private passenger auto insurance policies have exclusions for business use. If you have to drive for your business, you need commercial auto insurance

Moreover, if you require your employees to use their personal vehicles for work-related driving, you need to consider buying hired and non-owned auto insurance. This coverage is for vehicles owned by your employees that are used for work purposes. In some cases, you may be able to add this policy to a business owner’s policy.

Checklist Item #5 | Will you store customer or client personal information?

Many businesses will take payments online or store customer data on a local or cloud storage system. If this is you, then you can be a target for cyber-criminals or hackers.

Cyber Liability Insurance is a form of protection to help protect small businesses when there is a data security breach. Cyber liability insurance helps pay for the expenses incurred when responding to a data breach, but it can also provide small business owners help when complying with state and federal regulations and laws. If you have the right insurance, you will be able to move quickly to remedy a breach and begin to earn back customer trust.

Checklist Item #6 | Will your business serve or sell alcohol?

If you run the type of place where you can get an adult beverage, you may need to secure a very specific form of business insurance called liquor liability.

Did you know that a business can be held liable for alcohol-related injury or property damage that happens on its premises? It can. Your general liability will not cover these types of claims or lawsuits. Liquor liability insurance fills that coverage gap when your business serves or sells alcohol.

Checklist Item #7 | Are you the conservative type?

If you have a sizeable investment in your company, or you’re building valuable equity, you may want to consider buying a commercial umbrella policy. This provides an additional layer of liability protection to supplement certain underlying liability policies. like general liability, commercial auto, or professional liability. Note, in order to get the additional coverage, you have to have the active underlying policy. 

Checklist Item #8 | Will you be transporting or shipping equipment or products?

For most small businesses, the property insurance provided by your business owners’ policy will be sufficient to cover your business’s personal property. In general, the property coverage in a business owner’s policy covers property housed at your business location. In fact, it’s sufficient protection for a property like tools and equipment that travel with employees to nearby job sites? 

However, if your business frequently ships products or equipment, you may want to consider purchasing inland marine insurance. This type of coverage is especially important if you ship high-value products or materials, which are often excluded from basic property coverage. Inland marine insurance can cover a wide range of specialty equipment and products, including:

  • Computers, everything from servers to laptops.
  • Communications and networking equipment.
  • Construction and contracting equipment.
  • Medical and scientific equipment.
  • Photography equipment.

What will all this business insurance cost?

This is the most frequently asked question we receive. As we stated above, each business is a bit different, so it’s not the type of question that you can easily answer. You can review the factors that determine the cost of a business owner’s policy or the cost of general liability insurance, but the real way to understand your unique business insurance cost is to get a quote.

The bottom line

As time goes by you’ll get more familiar with your small business insurance needs, and you won’t need our small business insurance checklist. In fact, each time you buy small business insurance it will get just a bit easier.

Regardless, if you’re a seasoned business owner or just starting out, you should seek the advice and guidance of an insurance agent. Sure, these basic questions are a nice way to think through your business insurance needs, but the best way is with a professional agent. This can help to fully determine the right portfolio of insurance protection that is right for your unique small business.

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Looking for business insurance? Click “Start a Quote” to compare Business Owner’s Policy and Worker’s Compensation rates. Ready to purchase? Choose “Quote & Buy Online” to buy directly online.

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