Let's look at the basics:
In this day and age of corporate job lay offs, small business start ups are on the rise. Business insurance is part of the planning that goes into opening a start up company.
It’s normal to have questions regarding the type of coverage your business requires. Commercial business insurance covers a broad spectrum of protection that includes your property, you and your employees, and your liability. With a start up, it’s possible as the owner you have personal assets on the line.
As you begin to understand and put the pieces together, it is important to remember the ultimate goal is to make sure you are never underinsured or exposed in the event of an incident or disaster. Let’s look at the basics of small business insurance.
Small business property insurance will cover losses to your building, and the property housed in it. The computer and phone systems, furniture, finished goods, as well as carpeting, lighting fixtures and supplies will be covered. There are two options, either actual cash value, which is purchase price less depreciation, or the replacement cost of the item. Discuss these differences in more detail with your agent.
Business liability insurance must also be in place to protect the business and the owner against lawsuits.
A general liability insurance policy will cover most situations that may arise. There are specific types of liability coverage for risks not covered within the general liability policy. An example would be liquor liability insurance which is a separate coverage generally taken out by bars and restaurants.
Ask your licensed insurance professional what else you should be looking at for specialized coverage. In some cases, a business owner’s policy will combine these two insurance policies for a start up business. Again, talk to your agent or broker about whether a business owner’s policy may work in your specific situation. With Michigan being a no-fault auto insurance state, while suits are limited, an umbrella policy for additional liability is often recommended.
Most businesses are required to have workers compensation insurance if they have employees. This covers the employee from lost wages while protecting the business against being sued by the employee. Remember, even if you hire family members, they are considered employees.
More specific information is available from the Depart of Insurance and Financial Services. Check with your licensed insurance necessary to help you figure out your options and get a quote for general liability insurance.
The state of Michigan’s insurance website is here.