How to know what kind of insurance your small business needs

Business insurance is like that old joke about your mate - "can't live with it, can't live without it." As a small business owner, you probably know you can't afford to be without some form of business insurance. But you might not be sure what kind is right for your business, and you sure don't want to spend money on a type of business insurance that you don't need.

When looking for business insurance and business insurance quotes, it pays to get some advice and guidance from resources you can trust. Your accountant could offer some insight, and you should also check to see what, if any, kind of business insurance your state or local government requires you to have. Another option is to use an online tool, like American Express' InsuranceEdge, provided by Bolt(sm).

Most likely, your small business will need one or more of these types of business insurance: general liability/business property, product liability and professional liability, workers' compensation, home-based business insurance and commercial auto insurance.

General liability/business property

Most small business owners will benefit from the peace of mind provided by this type of business insurance. If you incur losses from property damage, a suspension of your operations or are liable for injury to others or damage to their property, this type of coverage can help defray your losses. General liability and property insurance is especially important if your business owns and/or rents expensive equipment, or conducts operations that could potentially cause injury to others or damage to their property.

Product liability/professional liability

If your business sells, distributes or manufactures a product, rather than simply providing a service, product liability insurance can cover your liability for product safety issues. Defective products that injure someone could spell financial loss for your business if a consumer sues over the product.

The amount of insurance you need will depend on what products you work with. Generally, the higher the risk of injury, the more insurance you'll probably need. For example, a shop that sells motorcycles will likely need more product liability insurance than a clothing store.

If your business provides services instead of selling a product, you should consider professional liability insurance (which is also called errors and omissions insurance). Customers who believe they have experienced professional damage due to malpractice, negligence or errors may sue for compensation. Some states require certain professions to carry this type of coverage. For example, if you operate a consultancy, you might want to consider errors and omissions coverage in case a mistake, oversight or wrong advice creates financial loss for a client.

Workers' compensation

Any business that has employees, even if it's just one, must carry workers' compensation insurance. If your employees get hurt or sick on the job, workers' compensation will cover certain medical expenses, lost income and rehabilitation expenses. Your state may require you to purchase workers' compensation from a commercial company, or allow you buy it through a state program.

Home-based business insurance

If you operate your small business from home, you may think you don't need any business insurance because your homeowners policy will cover you. But most homeowners policies do not cover home-based businesses. You may be able to add riders to your homeowners policy that would cover business risks like damage to office equipment. It's unlikely, however, that you'll be able to "stretch" your homeowners policy enough to cover general or professional liability, so you may need to purchase additional policies to cover those risks.

Commercial auto insurance

If you or your employees will be driving a company-owned vehicle, you'll need commercial auto insurance, which covers certain legal liabilities from a company-owned vehicle injuring someone else or damaging someone else's property. Businesses that benefit from this type of insurance might include any company that makes deliveries, such as a florist, or that provides company cars for employees to use while working.

Now that you have an idea of what type of insurance might be right for your business, it's time to find business insurance quotes. Using a tool like American Express' InsuranceEdge, provided by Bolt(sm), you can get advice and trustworthy options with minimal footwork.

Designed specifically for small business owners, InsuranceEdge, provided by Bolt(sm), allows you to get real-time business insurance quotes and purchase customized coverage, all in one place. After you've done your business assessment, you can tell a licensed Bolt agent about changes in your business. When they're armed with that information, he or she can help you find a policy that meets your needs. You'll also be able to review side-by-side quotes customized for your business by leading insurers.