Business insurance protects your small business, both financially and legally. However, if you are starting out, navigating insurance policies can be tricky. Some kinds of insurance are required by law, others by your clients, and others 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. In Canada, business insurance is not required on a national level. 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 if a defective product injures someone.
  
   
  • General liability insurance. This insurance policy protects your business against financial loss in many situations, such as a customer injury, property damage, 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 occur during a covered incident. For example, this would cover a shop closing due to flooding.
  • Worker’s 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.
  • Cyber liability insurance. This insurance policy covers cyber security and data breach protections. This type of insurance will protect your business and cover the cost of identity and data recovery.
    
• 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, remember 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 an excellent way to simplify your insurance purchase and get a better price.
  
• Compare prices and companies. Benefits, costs, and 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 protects you. If need be, discuss any business changes with your insurance agent to see how they might affect your coverage.
  
• Choose BBB Accredited insurance companies. Look for insurance providers that are BBB Accredited. BBB Accreditation indicates the company meets high standards of trust and transparency, giving you peace of mind when selecting a provider. You can also check for ratings and reviews on BBB.org to ensure the provider has a strong track record and exceptional customer service.

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To review this article and hyperlinked references in full, visit: https://www.bbb.org/article/business/27611-bbb-business-tip-the-right-insurance-policy-for-your-new-business

Contact your Tri-State BBB at 812-473-0202 to learn more about BBB Accreditation.