Business insurance whom

How to get business insurance

Although buying small-business insurance might seem intimidating at first — especially if you're a new business owner — the process can be much more approachable if you break it down into individual steps:

1. Review your risks and decide which types of insurance you need

First and foremost, you'll need to decide which type, or types, of commercial insurance you need. From the overarching liability insurance to the more specialized cyber liability insurance, there are a variety of coverage options to choose from — and the policies you need will largely be unique to your business.

Therefore, to help you decide which types of insurance you need, you can start by evaluating your risks as a business. As you might imagine, some businesses will be inherently riskier than others — a manufacturing or construction business, for example, will pose a much greater risk than a home-based e-commerce business.

Evaluate your risks

Although some risks will be unique to your business, location and industry, in general, you can think about:

What kind of accidents your business might be prone to: For example, a brick-and-mortar shop poses much more risk for a slip and fall accident than a home-based business.
What kind of natural or unexpected disasters might affect your business: You might think about things like floods, earthquakes, fires, hurricanes, etc.
Who staffs your business: Do you have employees? If so, you'll need to protect them and your business with certain policies.
What kind of lawsuits could your business face: For instance, if you manufacture your own products, you're more likely to face a business lawsuit for product defects than other types of businesses.

Once you have a better sense of the risks that your business faces, you'll be ready to look into the different types of commercial insurance and decide which ones your business needs.

Choose the right type of insurance

When it comes down to it, there are numerous insurance types to choose from, but you might start with some of the most common options:

Workers' compensation insurance: If you have employees, workers' comp insurance is required — although the details vary by state. Workers' comp insurance protects your employees in case they become ill or injured on the job.

General liability insurance: This is one of the most common types of insurance and all businesses should invest in this type of coverage. General liability insurance protects your businesses from claims of bodily injury, property damage or personal injury by a third party.

Commercial property insurance: Commercial or business property insurance protects your equipment, office space, inventory and more from loss or damage. This type of policy will be particularly important for businesses that operate out of a brick-and-mortar location.

Professional liability insurance: This insurance, sometimes referred to as errors and omissions insurance protects professional-service businesses (designers, consultants, accountants, etc.) from claims of negligence or other service-related errors. Professional liability insurance is necessary for any business that provides expert advice.

Product liability insurance: If your business sells any type of tangible product, product liability insurance will protect you from any claims related to defects in those products, including manufacturing, design and marketing defects.

Business interruption insurance: If damage or disaster causes your business to temporarily shut down or slows business, business interruption insurance can help make up for lost revenue.

Cyber liability insurance: Cyber liability insurance covers claims and costs incurred when your customer data — or any data that has personally identifiable information — is leaked or stolen. This type of policy is important for any business that stores data on the cloud or on an electronic device.

Directors and officers insurance: D&O insurance protects the personal assets of directors and officers, should they be sued personally based on a decision made or action taken on behalf of the company. This one is particularly important for business owners with outside investors or in regulated industries.

Key person insurance: Key person insurance is akin to a life insurance policy for essential members of your business. In case something happens to this "key person," your insurance provides funds to help you cover losses and hire a replacement.

Business owner's policy: A BOP combines multiple types of commercial policies into a single more affordable bundle. Business owner's policies typically include general liability insurance, commercial property insurance and business interruption insurance; however, many providers allow you to customize these policies to add other types of coverage as well.

Of course, although there are a number of different types of commercial insurance, not every business will require the same coverage. The policies you need will be unique to your business. Moreover, when you're first figuring out how to get business insurance, you can always start simple, with a general liability policy or a BOP, and opt for additional coverage later on.