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Vital Insurance for Business Owners

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September 20, 2013

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When you first started your business, you probably put all your focus on making your idea become reality—where to offer your products and services and how to make your customers happy. However, product failure, personal injury and natural disasters are all facts of life for a business owner. In just the state of Missouri, the Department of Insurance reports that 1,894 paid insurance claims for product liability were made for appliances alone, with an average payment of $2,728. If the business owners didn’t hold liability insurance, these claims would have resulted in lengthy legal battles and potentially higher payments, and the owner’s personal assets could have been opened to lawsuits. Put your necessary insurance in place at the beginning of your business journey, so you don’t end up losing out at the end of it.

General Liability Insurance

According to the Small Business Administration, general liability insurance covers any claims that occur from accident, injuries and negligence claims. If someone ends up suing you for this situation, the insurance company covers payments for property damage, medical expenses and bodily injury settlements, along with covering the legal costs of defending the lawsuit.

If you’re just starting out, you probably don’t have a lawyer on retainer, so this is the bare minimum insurance you should have to cover claims. There’s also specific liability insurance, such as product or professional liability insurance, that provides further protections.

Workers Compensation

Workers Compensation insurance can be a confusing matter for new business owners. This insurance covers rehab, medical and lost wages for employees who are hurt on the job. This insurance personally protects your business against the worker suing you in the event they are injured during their work hours. Most states require you to have workers compensation if you have employees. You can purchase workers compensation from The Hartford or another insurance agency.

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Commercial Property Insurance

If you run a business in a commercial location, you want commercial property insurance in place to cover claims such as loss of property, property damage, disaster recovery, vandalism, lost income and many other common claims. This insurance covers the commercial real estate and your equipment.

It comes in two different forms: All-risk policies cover a massive range of potential incidents, with the exceptions clearly marked in the policy. Peril-specific policies only cover specific situations, such as business interruption insurance or flood insurance. Choose all-risk to cover all situations your small business may face, and go with peril-specific policies if there’s a high likelihood of a flood or another specific peril occurring.

Home Business Insurance

Your homeowners insurance is not going to cover the majority of business-related losses for your home-based business. You need specific insurance to protect your equipment and business activities within your home. This policy may be offered as an addition for your existing homeowners insurance, but check with your insurance agent to see if you can add it on. You don’t want to have your business derailed when you realize homeowners insurance doesn’t cover the cost of your equipment, after all.

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