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When you’re starting a business it can be hard to decide what all you need. There are so many things you have to have and lots of extras that you might be able to get along without. But is business insurance one of those?
That depends on the kinds of risks you are willing to take, particularly if you are a sole proprietor or a partnership. Incorporating may not provide all the protection you expect if you don’t do it just right, so don’t assume you’re safe if you’ve incorporated. There are still plenty of situations where you can be liable.
What Kinds of Business Insurance Are There?
There are several kinds. You will have to decide which are appropriate to your situation and needs.
The first is liability insurance. This is probably what you think of when you think about business insurance. You will probably want this if you have people coming into your home. It will cover claims resulting from injuries or damages that occur on your property. Check with your homeowner’s insurance to figure out what areas it will cover so that you can avoid unnecessary overlap.
Another is umbrella liability insurance. This can be very important, as it protects you in case someone sues you. This is the other kind of business insurance many people think of. In this lawsuit-happy world, you might not want to skip this one.
Business interruption insurance might be a less familiar kind of business insurance. It helps out if something causes you to close down your business for a time. Think about what you would do if something happened to everything you use to run your business. How would you get started again?
Finally, consider overhead insurance. This is protection you’ll want to consider if you’re making a profit. It can cover rent, utilities, salaries, insurance and interest payments related to your business if you suffer from a major illness or accident. If your business is the major or only source of your household’s income you might really want to consider this.
Business insurance may seem like an extra, but in many cases it is simply good sense. You know life doesn’t always go the way you expect it to, and business insurance can help smooth the rough times.