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Small Business Insurance Basics

By: Stuart Broad

Running a small business can be tough at times and most businesses run a fine line between being profitable and making a loss. These narrow margins leave small businesses very vulnerable to the risk of losses resulting from accidents, theft or lawsuits. Minimizing risk is essential for small business owners and adequate insurance is an essential solution for this. Business insurance offers protection for when your product or service fails, when someone is injured on your property, when a thief walks off with your office computers or when your driver crashes the company vehicle.

Getting the right type and amount of cover is a daunting task for most people. As a result many small businesses are either under insured, over insured or worst of all not insured at all for vital risks. The type of business you are running and the types of products and services you offer will largely determine the type of insurance you require. In general, small businesses need a combination of the following types of policies:

Public Liability Insurance

This type of insurance policy protects your business from lawsuits associated with damages caused by your business or injuries sustained by people on your business premises.

Professional Indemnity Insurance

If you are a professional like an accountant, investment advisor, tax consultant or even an insurance broker then you should definitely consider taking out this type of insurance policy. It protects you from losses that could occur should a client sue you for advice or services that may have led to the client losing money. Professional indemnity insurance covers legal costs, court fees and pays the settlement should you be found liable.

Workman's Compensation

Many countries have regulations that make workmanís compensation insurance compulsory, but even if it is not, this type of insurance can cover injuries sustained by your employees while on the job.

Business Interruption

If something happens like a fire on your premises and you need to stay closed for a significant number of days, weeks or months, this type of insurance will cover your fixed expenses like rent, utilities and taxes. Having to cover these expenses while the business is not generating an income would be disastrous without adequate insurance.

Building Insurance

Just like with home building insurance this type of policy covers the expenses of rebuilding or fixing damaged business premises following a fire, water damage or similar event.

Business Motor Insurance

This is similar to regular car insurance, but usually differs in terms of the drivers stipulated in the policy. Since several different people typically use a business vehicle a policy with multiple drivers is usually needed. Should the business operate many vehicles then fleet insurance will be required.

If you are unsure about your small business insurance needs, then it is vital that you consult an insurance broker who specialises in small business insurance. An insurance broker will be able to analyze your businessís services, products and activities in order to determine where your high risk areas are and provide you with policies to cover this risk. A broker will also be able to source several insurance quotes for you in order to find a good deal.

Running a small business can be tough at times and most businesses run a fine line between being profitable and making a loss. These narrow margins leave small businesses very vulnerable to the risk of losses resulting from accidents, theft or lawsuits.

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