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By Fred Steingold
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Fred Steingold, a business lawyer in Ann Arbor, MI, is the author of
Legal Guide for Starting and Running a Small Business, The Employer's Legal
Handbook, and How to Get Your Business on the Web (all published by Nolo Press).
Q. I know that I need insurance for my small business. Trouble is, I don't know what kind. Can you help?
A. While the details will depend on the type of business you have, here are some general guidelines you can follow.
Every business needs property coverage, to insure the building you own or the lease space you occupy. You also want to be sure that your business personal property -- everything other than the building and space -- is covered. If you sometimes hold customers' property, you should insure that as well.
There are two types of property coverage. A basic form policy includes losses caused by fire, lightning, explosion, vandalism, and other perils. A broad form policy covers even more risks. Obviously, the more extensive your coverage, the higher your insurance premiums will be, although you can shave your bill by increasing the deductible -- the amount you absorb if there's a loss.
You also should get liability insurance. A general policy covers you if you're sued because someone is accidentally injured by you or an employee, or because your premises are unsafe. If an employee intentionally assaults a customer, however, you're out of luck. Warning: Your policy won't insure vehicle accidents or injuries from defective products or on-the-job injuries to employees. You'll need separate insurance to cover those risks. And professionals need professional liability or malpractice coverage.
In addition, think about getting crime coverage for theft of your business property. And if a fire strikes, business interruption insurance can help pay the rent on temporary quarters -- and also compensate you for lost profits. And remember: Before you make your final decision, ask your own lawyer for advice.
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