Small Business Insurance. Are You Protected?

Sometimes small business owners can become so preoccupied with developing a marketing plan, acquiring customers and formulating ways to generate capital that they forget to purchase one of the most important things that can protect their online business in the long haul: insurance.

Truth be told there are many risks associated with launching an online start-up.

You need to ensure that incase there is any kind of property damage, loss, or if someone sues you, you will be fully or at least partially protected.

That said, this post are just ‘some’ of the major insurance policies/plans a small business owner should look-in to in order to receive some decent coverage.

For At-Home Online Business Owners

Before anything else is said, it’s important that you understand that if you choose to conduct your online business from the comforts of your own home that does not mean that you are automatically protected through your traditional homeowners insurance. Granted your homeowners insurance may cover losses such as property damage during a storm or fire for example, but in order to cover all other areas (especially those pertaining to your customers, employees and the products or services you sell) you will need to double-up and add one or more of the following insurance policies to your homeowner insurance:

• General Liability Insurance. No matter if you sell a product or service, general liability
insurance (also called commercial general is the staple policy that every small business
owner should purchase. If an employee or customer is hospitalized due to an on-the-job
accident or injury, or if someone tries to sue you because of those injuries ( or tries to
make a claim negligence), this insurance policy will help cover medical expenses and or
will help cover court costs so that you won’t be forced to pay out of pocket. It will even
protect you from slander and libel as well as “advertising injury”—injury caused by an
advertisement you distributed.

• Product Liability Insurance. If you sell a product—this includes manufacturing,
distributing, or wholesale—purchasing this insurance policy is a must. Not only does
it help you bounce back from a financial loss due to a defect made somewhere in the
manufacturing and/or distributing process, but it also helps protect you if that defect
results in a costumer getting injured. Of course the amount of insurance you will need
to buy will depend on the line of work you’re in—for example if you sell clothes your
products will serve less of a potential threat than tools or appliances.

Professional Liability Insurance. If your online business sells services on the other
then it’s important that you purchase professional liability insurance, which is sometimes
referred to as errors and omissions insurance. This type if insurance will provide
you with some sort of coverage and protection if for some reason you are sued due
to negligence or malpractice of your services. If you live in a particular state and are
involved in a particular profession purchasing this type of insurance may actually be
mandatory. For example, practicing physicians must purchase malpractice insurance.

For Remote Office Small Business Owners

• Commercial Property Insurance. If you do not conduct your online business through
your home then it’s important that you get commercial property insurance as well as
one or more of the policies mentioned above. This insurance will be able to help you
recover from losses due to fires and storms as well as vandalism; this includes damage to
the actual building, important business documents/books, valuable papers, and property
within the building (including leased equipment). Note that there are two different types
of commercial property insurance a) an all-risk policy and b) peril specific policies. The
latter will only cover losses that are specifically stated (listed) on your policy.

*Note that while the above recommendations are designed for the more “general” small business,
you may very well have to get some additional policies as soon as you a start to expand—not
only must you stay in code with regulations but more employees and more customers mean
greater risks. In this case, you have to consider getting worker’s compensation, and health
insurance just to name a few.


This guest post is contributed by Lauren Bailey, who regularly writes for best online colleges. She welcomes your comments at her email:


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Entrepreneur Magazine says Jon Rognerud is one of the most sought-after Digital Marketing Experts. His clients extend from high-end brands and middle-tier businesses in both B2B and B2C. His SEO website optimization book, "The Ultimate Guide to Optimizing Your Website" from Entrepreneur Press is in bookstores now.