If you’re just starting out in the world of small business, you’ve probably read a fair bit about the importance of small business insurance. However, you should know that there are many different types of insurance, and you may not need all of them.
Read on to learn whether insurance is mandatory for your small business and which policies may not be necessary for your unique industry.
Common Types of Business Insurance
Familiarize yourself with the most popular insurance policies for small business owners. When you know what each policy covers, you can often decide whether or not you need it—with a few exceptions.
This policy keeps you and your business protected from any customers’ claims of personal injury or property damage. If a customer slips and falls on a wet floor in your retail location, for example, liability insurance will cover you if they decide to sue.
If your store or office is damaged, whether from vandalism or adverse weather events, a commercial property insurance policy will pay for those damages.
If your business is unable to operate for a period of time, business interruption insurance will allow you to recoup the income you lose while you’re closed.
A Business Owner’s Policy (BOP) combines the above three policies into one package and helps you save money on those premiums. Although, if your business operates online with no brick-and-mortar location, you may not need one or more of these policies.
Mandatory Insurance Policies
While you may opt not to buy insurance policies you feel are unnecessary, be sure to look at the laws in your state. Certain insurance policies are mandatory for specific types of businesses, or those that employ any staff.
If you have one or more employees, even if they are only part-time, you must carry worker’s comp insurance in case someone is hurt at work.
Do you operate a bar or a restaurant that serves alcohol? In order to obtain a liquor license, you need a liquor liability insurance policy. It’ll keep you covered in the event any damage is done by an intoxicated patron.
Certain fields require a professional liability insurance policy in case a customer sues over errors, oversights, or omissions. Real estate agents are required by law to carry this policy. In Idaho and Oregon, lawyers need this insurance, too.
Is Insurance Mandatory?
The answer is, “It depends.” When choosing insurance policies for your business, consider the type of business you’re operating and the needs of any staff you employ. Many insurance policies, like business interruption insurance, may not be required by law, but they are recommended in case of an emergency. Which insurance is mandatory for your small business? Consider the laws of the state you live in, your chosen career field, and the welfare of your employees as you shop for policies.